Found out the hard way that a signed LOI isn't a done deal in Detroit

I was at a coffee shop on Woodward last month, about to send the deposit for a lease on a spot near Eastern Market, and the landlord called to say he took a higher offer, 15 minutes before I wired the money. I hadn't checked if the LOI had a binding clause and lost two weeks of negotiating time. Has anyone else had a seller back out after signing, and did you ever get your due diligence costs back?

3 comments

3 Comments

charles4421d ago

A real estate attorney I know up in Birmingham told me last year that LOIs in Detroit are barely worth the paper they're printed on unless the binding terms are spelled out line by line. He had a client lose about six grand in survey and title work on a Corktown property when the seller ghosted after signing, same kind of situation you're describing. The frustrating part is sellers know most small operators won't push back legally, so they treat that signature as a courtesy rather than a commitment. You might have a shot at getting those due diligence costs back if you can show they acted in bad faith, but most lawyers will tell you it's not worth the fight for a couple thousand bucks. Next time around, make sure the deposit and cancellation penalties are tied to the actual signing date, and have your attorney review it before you spend a dime on anything else.

elliot_taylor1d ago

Kept my own LOI non-binding for purchase terms but made the due diligence timeline and cost split explicitly binding with a small escrow deposit. That way the seller had skin in the game if they bailed, and it covered my survey and title work out of their money when they tried to ghost. Yeah it took an extra hour with a lawyer to draft, but that was a hell of a lot cheaper than eating six grand again.

mark_mitchell1d ago

Six grand buys good faith; your binding dates kill that leverage.