Home Buying in Chicago>Question Details

Mitch, Home Buyer in Chicago, IL

Home Contract Cancellation but seller left the country

Asked by Mitch, Chicago, IL Fri Jun 18, 2010

I have send short sale contract termination notice send to seller's attorney because the home is already sold as sheriff's foreclosure and its now REO. The listing realtor will not reutrn earnest money unless seller signs the cancellation rider. Now seller has left the country and cannot be contacted anymore. So how can I get my earnest money.

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It sounds like you are not in default so you are correct in expecting your money be returned, I do not know all the details and am Not giving legal advise so consult an attorney, but you might want to have the sellers attorney sign off on the return of earnest money for the seller. This allowed, but please do not use this as fact, check with your attorney on this.
0 votes Thank Flag Link Mon Jun 21, 2010
You can try contacting the broker owner of the realty office and express your concerns regarding your money--if all else fails, consult with an attorney who specializes in real estate.
0 votes Thank Flag Link Fri Jun 18, 2010
Ultimately, the specific instructions in your purchase agreement will control the circumstances under which the earnest money can be released back to you on cancellation of the transaction. Given that the home no longer even belongs to the seller, I can imagine that some brokers would simply give you the deposit back, while others would - out of an abundance of caution - stick with the letter of the contract.

You might want to ask your agent's broker/manager to contact the broker/manager of the listing agent to see if they would consider exercising their discretion in your situation - since the seller can no longer legally perform the contract, in any event.

If they refuse (which is certainly within their rights to do), unfortunately, under most real estate sales contracts you'll have to go to court and obtain a court order for the earnest money deposit to be released.

This is one of the reasons many buyers' brokers/agents suggest their short sale buyers sign an addendum/clause under which the earnest money deposit will remain uncashed and with the buyers' broker unless and until the seller's bank approves the short sale - which generally doesn't happen when a foreclosure is looming that near, unless the bank is also willing to postpone the foreclosure to allow the short sale to close.

Depending on how much your deposit was, you may be able to go to small claims court and get a court order for the return of your deposit money fairly quickly and with a relatively small amount of effort and cost.

Good luck!
0 votes Thank Flag Link Fri Jun 18, 2010
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