Opinion ID: 2390262
Heading Depth: 1
Heading Rank: 2

Heading: The Nisi Hearing

Text: The published offer for the Independence Avenue property was for a total purchase price of $212,000. The original offerors paid a cash deposit of $5,000, and their contract provided for an additional $5,600 to be paid at settlement to complete the down payment. Their contract was contingent upon the purchasers securing a commitment for financing the $201,400 balance within forty-five calendar days of ratification of the contract, and the purchasers agreed to make application and file documents for processing the loan within seven days. The offerors attached to their contract a letter from Mortgage Investment Corporation indicating that they had made an application for a loan for the transaction and that they appeared to qualify based on the information which they submitted. The letter also indicated that it was not a loan commitment and that approval of the loan was subject to verification, additional documentation, a credit report and appraisal. At the hearing scheduled to consider the original offerors' contract and to entertain higher offers pursuant to the order nisi, appellant offered $233,211 for the property. Appellant initially offered to make a down payment of $63,200, of which a deposit of $5,000 would be a part, with the balance to be obtained through financing of $110,000 and a credit given for his 50% ownership interest in the property at $60,000. However, appellant stated repeatedly that if his request for a credit for his interest were cause for denial of his bid, he would raise his offer by a higher cash payment. [13] Appellant also provided a statement from a lending institution indicating that he had made an application for a loan and that he qualified for a loan commitment of $110,000 based on the financial information he had provided. Like the statement provided by the original offerors, appellant's potential lender's statement also reflected that it was not a loan commitment and that it was subject to a satisfactory appraisal and credit report. At the hearing, the court asked for bids in excess of $233,200, but there were no higher offers made. Counsel for appellee, James Lynn, informed the court that appellant would not be able to obtain financing for the purchase based on representations appellant made in a pleading filed earlier concerning his financial condition. The court attempted unsuccessfully to ascertain the amount appellant might derive from his 50% interest in the property. [14] Appellees' counsel represented that if appellant could prove that he could come up with the cash, he would have no objection to the sale to appellant. Appellant first represented, and subsequently testified, that he had been self-employed since 1977 and that he was a member in good standing of the Maryland Bar, doing some consulting and conducting a small real estate business. Appellant offered to bear the cost of any delay if his offer to purchase were not completed, including posting a bond. Thereafter, appellant was called as a witness in his own behalf. In response to questioning by the court, appellant testified that he had cash on deposit in two banks totalling between $113,000 and $123,000. He reported a capital gain of $70,000 for 1988. Appellant testified that he had real estate tax losses of roughly $10,000 for 1988. When the court inquired of appellant if he had received any W-2 or 1099 tax forms, he responded that he had not. For the three months preceding the hearing, appellant testified that his income, not considering the properties in dispute, was $4,000. Appellant also indicated that for tax purposes he expected to show tax losses as a result of this law suit, depreciation and returns on other real estate. Although appellant testified he had consulting work in the last sixty days, he said he had had no such work in the last thirty days. However, appellant offered to provide a creditor's financial statement under oath to demonstrate that he had sufficient cash backing for the contract. He testified that he owned other real estate and that the lender was willing to finance the purchase, apparently on that basis. He also testified that it would be standard practice for a financing company to provide the loan with such a large down payment on what appellant thought was significantly undervalued property. [15] The net earned income which appellant reported of $48,000 to $50,000 for 1988 was for a sale of his residence. He also said that he had several small credit cards. Appellant was reluctant to disclose further information about his consulting clients and financial circumstances to appellees at the hearing. The motions judge found that since appellant had no W-2's or 1099's, he had no formal employee or contract income, contract of employment income. The court observed that appellant's gross income for 1988 was referable to the proceeds of sale of real estate. The court considered appellant's $10,000 loss reported in 1988, his unquantified, anticipated real estate losses for the preceding three months, and appellant's report of only slight consulting business in the last sixty days. Based on these findings, the court concluded as follows: It is the Court's general recollection that the service a $110,000 mortgage would require at least $1200 a month mortgage payment, and probably somewhat more in terms of the  insurance requirements. And a  this would require a regular gross income of something on the order of 3500 to $4,000 per month, and there just is simply no indication of anything like that in this case. So I have to conclude that the offer at a higher price is not a bona fide one and should not displace the offer which appears  which is subject to the order nisi which appears on its face  accepted.