Home Buying in 02368>Question Details

Michele Evans, Other/Just Looking in Randolph, MA

Home purchase did not go through because loan denied. Seller now trying to keep buyers deposit. What steps does seller need to take? I am the buyer?

Asked by Michele Evans, Randolph, MA Tue Oct 12, 2010

All requirements of P&S were followed and Financial Institute denial letter forewarded twice to listing agent of property with no response after 2.5 weeks.

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Answers

13
Your lawyer should read the contract and call their attorney. When they are sent a notice of attachment I'm sure they will sign the release and you will get your money back.

Good luck
2 votes Thank Flag Link Tue Oct 12, 2010
To answer your specific question ... "What steps does the seller need to take?" ... The money is currently in escrow ... either held by an attorney or by the broker agency ... an agreement must be signed by both parties (buyer and seller) for that money to be released to anyone ... whether it be the seller or the buyer.

In escrow means that it is currently no one's money.
1 vote Thank Flag Link Tue Oct 12, 2010
It all depends on whether there was a mortgage contingency on the offer or not and when the commitment date was set ... etc.

If there wasn't a mortgage contingency in the original offer (and subsequently noted in the P&S) ... then the seller may have grounds for keeping the deposit. Hopefully, your attorney saw to it that you were protected against this possibility.
1 vote Thank Flag Link Tue Oct 12, 2010
lender had income and credit report2nd week in January 2013 granted preapproved loan for 72200 any info realtor or lender ask for I did produce in a timely manner. Realtor stated hud would need $1000 down I mailed it in a certified check next lender sent papers to sign involving estimate on work to be done on the home in order to bring the home up to code, I noticed the estimate did not show estimate on plumbing or roof needs to be sealed nor any estimate on electrical repairs that was stated in the inspection report.203k loan on repairs are $23319 . lender only use the first credit report when I first applied and was aware of income, why would realtor and lender put me through turning on water, electric, pay for inspection and apprasial knowing of my income Right now am out of $1900. I later found out realtors do have courtesy turn on accounts with the water company and electric co. my realtor said she could not help me I would have to do that on my own in order to get the house inspected is there anyway I could get my money back the only money that is offered back to me is my $1000 deposit I gave the lender monthly income $1249 lenders put down income $1691 monthly income is that illegal for a lender to do? I do feel there is some wrong doing please give me advice as to handling this situation. Aleiaue Ramirez
0 votes Thank Flag Link Sun Mar 3, 2013
Contact the broker, if you do not get anywhere from here, contact a R.E attorney.
0 votes Thank Flag Link Sat Jan 22, 2011
If you complied with the contract and apllied for you loan in a timely manner and did not misrepresent anything, I am as puzzled as you.
You should immediately consult with an attorney.
0 votes Thank Flag Link Sat Jan 22, 2011
You should first contact the broker holding the deposit, then your atty if you do not receive your deposit back.
All this assumes you had your mortgage contingency clause intact and kept to the dates and correctly notified the seller.

If that is the case.. your money is yours to have back. I just had a deal fall through a week before closing due to a loss of work and my guy got his money back promptly.

I have owned my own brokerage and my guess is that your best bet is to go directly to the broker holding the deposit. They cannot release funds without a signed agreement by both parties, or put towards the successful closing... or when a judge renders a judgement.....period.

Call the broker, then your atty and you will get your money back.

In the future...make sure you have a good buyer agent and atty to lower the risk of this sort of issue.
0 votes Thank Flag Link Sat Jan 22, 2011
Michele,
Sorry to hear this. I am hoping you had "subject to financing" on your Purchase and Sales agreement. If so,did you have a mortgage commitment letter after the denial? If the information was documented prior to the loan commitment letter, you are entitled to the deposit back, but make sure you had "subject to financing and the loan commitment date didn't pass after the indicated date on the agreement. If you have documentation that the financial letter was sent to the listing agent, you should pursue your deposit and not sign any documents unless and until you have an attorney to represent you. Did you have a buyers agent? It is rare that deposits are kept by the seller.. know your rights. get an attorney
Good luck with this, Michelle.
Web Reference: http://southeastmahomes.com
0 votes Thank Flag Link Mon Oct 18, 2010
your money is protected under a mortgage contingency. If you had this and you submitted your mortgage application on the date listed in the contingency and received the commitment on or before the commitment date listed in the contingency you should have legal recourse. If not, your money could be at risk.

Consult your attorney.
Web Reference: http://territoryre.com
0 votes Thank Flag Link Tue Oct 12, 2010
The deposit can only be kept if the buyer did not adhere to the dates in the mortgage contingency clause
0 votes Thank Flag Link Tue Oct 12, 2010
Hi Michele,
You want to review the document that was sent to the agent. Does it clearly say that it is a denial and that you are withdrawing from the property?
Was the document sent via email or fax ? Are receipts available showing that it was in fact sent with the date and time?
If so save any and all documentation in a safe location.

Ultimately if you supplied the buyers agent with the letter of denial within the dates outlined on the purchase and sale contract the seller would have no recourse to refuse to release your deposit BUT the broker will need a mutually signed release.

You should absolutely contact the attorney who drafted or reviewed the purchase and sale contract for their input and don't hesitate to get the broker of record involved if you are positive that you acted within the commitment date allotted.

Release issues can be sticky. It's always best to document every conversation that has taken place.

Best of luck.
Web Reference: http://www.route495.com
0 votes Thank Flag Link Tue Oct 12, 2010
First hopefully you had a mortgage contingency clause in your offer and purchase and sale. Secondly get an attorney. It may costs you some money, but they will be get the job done. If as you say all other contingencies were filled and your agent has copies and records of trying to let the listing agent know of your denial, you should be home free. Hopefully someone has an email or fax receipt of it being sent to the seller's agent.
Good Luck, but don't be penny wise and pound foolish, get a real estate attorney.
Marg McShane CBRB Sciutate
0 votes Thank Flag Link Tue Oct 12, 2010
Check with your Realtor.

Usually--but I don't know about Massachusetts, so you really need someone familiar with Massachusetts--the deposit is kept in escrow. And, yes, it generally does take the agreement of the buyer and seller to get the money released from escrow.

I'm not a lawyer, so what follows is not legal advice. For legal advice, you need a lawyer. (However, initially, your Realtor should be able to assist.)

Was there a financing contingency in your contract? That is, do you have a right (per your contract) to receive your deposit back? If so, there are various steps you can take--your Realtor can advise you--to attempt to get your money back.

If there wasn't a financing contingency in your contract, then you may not be due any refund of your deposit.

So the first question really is: Based on your contract (and the presence or absence of a financing contingency), are you entitled to a return of your deposit? If yes, your Realtor can outline the steps you can take.

Miscellaneous question: Were you pre-approved for the loan? If yes, then why was it denied? Is it possible to have the decision reviewed? Or to find another lender to make the loan?

Hope that helps.
0 votes Thank Flag Link Tue Oct 12, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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