I think this falls under extortion.
On August 20th, 2013 my husband and I got a rental property on the condition that we would purchase it within 1 year or forfeit the 1500 deposit we paid, but that if we purchased the 1500$ was our down payment. Our landlord seemed anxious to dump the property as soon as possible and agreed to drop the price 10% if we paid off in 6 months. We explained at that time we were trying to improve our credit in order to purchase but that we would try. Upon signing the rental agreement I also had her sign a document saying that unless we were unable to purchase at the end of our 12 month term she agreed not to sell to a third party, and that unless we were unable to follow through with the purchase the contract held for 14 months. In case there were any bumps with closing on time I wanted to be covered. We weren't able to do it in six months. Ever since then about once a month she has been sending us text messages asking us when we were going to purchase. Then on June first she told me that she needed a 4500.00 down payment by July first. We said we'd try but could make no promises as we were counting on being able to use the full year of our lease, if for no to her reason than to use our back up plan to purchase (in case our credit wasn't sufficient, my brother in law was going to do the loan in his name to help us.) WE thought we would be able to get the 4500 prior to the first from a tax return we were waiting to file specifically so we could use it on the house, be it a down payment for the bank, or on home improvement projects. It was delayed in getting returned to us and we weren't able to get it before the 14th of this month. We purposely did not agree to pay this on the 14th but stated we should have the money by the 14th. During this time she began to threaten if we didn't pay her because her mom needed shoulder surgery, that she was going to list the house on July 14th a full month and 6 days prior to our lease expiring and well before the expiration of the 14 month deadline. On the 14th we asked her to meet with us, because we weren't going to hand her 4500$ with no legal documentation guaranteeing our position. At which point she flipped out. The text messaging was frequent and abusive in nature. She relented a little saying we only needed to pay 2500 because we already did the 1500. Finally she said if she doesn't get her money she's not meeting with us. How can we buy a house from her or even think about giving her money when she's acting like this without a signed contract and is what she is doing even legal, or is this extortion?

Forget about the term extortion - this doesn't qualify. You are just in a typical landlord-tenant mess with the added burden of an agreement to buy. I have a feeling that she had many expectations in the last 6 months based on your hopes to be able to buy sooner rather than later. A certain amount of sympathy for her from me on that issue.
BUT all that matters is what is in WRITING and signed by both parties.
At this stage, if you still want to buy, hire a lawyer. This is a classic example of why we have realtors and lawyers, to act as buffers between emotional people.


How close are you to being able to actually close on Aug 20, and not lose the 1500 as the down payment? It is uncomfortably close to be working on a co-signed loan, or any kind of loan, now. I would not talk to her at all. Paper trail only from now on. Have you checked the deed for liens, are taxes paid to date, is the property in her name, do you actually know what you are doing??

By law she can put the property up for sale any time she wants. She just can't sell it until your contract has expired. And she can sell it during the extended rental period. Any new owner would have to honor your rental agreement for the remaining period of the lease.

If you are hoping that her demands for money mean that you can get out of all the agreements and get your 1500 back or apply it to future rent, no.

No its not criminal extortion. The bottom line is you have a document in which she agree to give you time to purchase. If she reneges on that agreement you can file suit. On the other hand, I doubt if there is anything in that document that precludes her from listing and showing the place. But she needs to disclose your prior claim to anyone who shows interest and you have the right to mention it to them to make sure they are aware.

Yes she is being a PITA, but there is really no law against that. She can threaten and bluster all she wants, but she can't take any action in violation of your written agreement without opening herself for a lawsuit.

Honestly at this point I'd almost rather eat the 1500 deposit/down payment thingy, than continue with this agreement. We are already in negotiations with a bank for the funding we just haven't ironed out all the details regarding safe guarding my brother in law in all of this. He wanted to wait as long as possible to put his name on the loan, in case we could improve our credit enough not to get shafted on the interest rate, hence the needing the full year. We are getting a lawyer at this point my brother in laws is coming into play since he's the one taking the burden of the loan for the five years it will take us to pay the house off, and there is a beautiful house down the street for about 5% less than she is asking for this one, it's older and needs some work but honestly she never saddled us with a penalty clause for not purchasing and I'm about ready to wash my hands of her. She refuses to meet with us unless she gets her second down payment, and I won't give it to her without a contract protecting me from any more of her irrational behavior.

I should mention this is a manufactured home in a park, in case you're raising your eyebrows at the small amounts of money in play.

If you are hoping that her demands for money mean that you can get out of all the agreements and get your 1500 back or apply it to future rent, no.

No that's not it I just want to make sure that if this gets any nastier I know what grounds I have to stand on. I'm in a fabulous neighborhood, my daughter enrolled in the second best school in the state, I just want to be settled. I'm not in a strong position, I'm essentially a beggar and I'm not being choosey, but I refuse to be treated like garbage as well. It's really not my fault if she overspent. We made no guarantees and we were careful not to. Always saying, every time that we would try but could make no promises, and were very careful to express in the beginning that we lost our house in 09 when we both lost our jobs, our credit had suffered as a result but that we knew we made mistakes and weren't interested in filing for bankruptcy but in accepting our mistakes and repairing our credit on our own by paying off what we owed. We made significant strides in the last year paying off more the 15k in debt, but it hasn't impacted our credit enough to not get screwed on interest rates. Also we expressed my brother in law would only help us if we passed a pay off threshold that satisfied him that we would be able to continue with the loan if he signed off on it.
We were honest, forthright and completely open every step of the way. It's her threats in order to get money from us that have me I guess feeling like a victim, and I don't like it.

She ( and you) are bound by the exact dates and terms and money in the agreement.

Merlely demand that she follow them...

There is, actually, a penalty clause. Your forfeit the down payment if you are not able to close the sale on time. If you have found a better deal, then walk away from this one.

Bottom line:
You don't have to buy it.
She can put it up for sale any time but can't close until 8/20.
She has to honor the rental agreement until 10/20 as long as you keep to the terms.