This may or may not be a tough question... but I'm interested in your input. Here's some background:

1. July 2007 - I signed an offer to purchase with a seller (he was an investor, no lawyer or anyone involved... just your basic offer to purchase). While not in the contract, we agreed I would rent the place until we closed. I gave him $1000 Ernest Money. He cashed that check in August.

2. October 2007 - Found out my wife was pregnant, not going to be working, and I would be moving, so I backed out of the contract (verablly) and told him to keep the ernest money because I had backed out. We also verbally agreed that I would continue renting until he found another buyer. I wanted to get it in writing, but like an idiot, didn't.

3. December 2007 - He calls and wants us out in a couple weeks to make room for new buyers. No problem I tell him. We move out and leave our new refrigerator and some other things we had added (primarily nice blinds). We agree WITH the LANDLORD, he will pay $1000 for those things.

4. January/February 2008 - He goes back and forth saying the new owners owe us money, then he does, then they do. Finally, he post-dates a check (Jan. 31) to me: Writes it to me, for $1000, with the memo: Refrigerator.

5. On Jan. 30, he calls me to ask me to hold the check for 2 weeks. I do. The night before that, he calls and asks for the check number to "balance his checkbook." Like an idiot (I know, a pattern), I give it to him. He calls and stops payment on the check. Now he refuses to pay. I tell him I'll take him to small claims court.

So, here's the question. In response to me asking for my money, he tells me he'll take me to court over our breached contract (the initial offer to purchase). Does he have a case?

Here's why I wonder:

1) He kept the ernest money (I thought that was for damages in case the contract went through).
2) We agreed to close on Nov. 1, but never did. By me living there until the end of December, paying rent on time (I have cleared checks that say "rent"), and then HIM asking ME to move to make room for new buyers, it seems to make his intent pretty clear.
3) My only other hope is that he doesn't flat out lie, and admits that during our conversation in October he agreed to let us rent. He's since changed his mind and decides he wants to sue (since we might sue him). But, legally, isn't it his intent when we had that conversation that matters?
4) Assuming he does have a suit, what damages can he claim? We didn't buy the house, but HE brought in other potential buyers, we have him the $1000, and no damage was done to the house.

Thanks for your help!

I think his sending you the check works in your favor because if he wants to try and sue you you can ask the court "Then why would you have ever even considered writing me this check if you felt I owed you for breaching the contract?"
I think you would be best off calling it even and hope he does the same. If he still tries to sue, counter sue.
I think that since he rented it out in December he would only be able to TRY and get you for money up through November at the most.

Hold on to the check.

Tell him to countersue