Allen Gero, Home Buyer in Parma, OH

If you pull your offer from a short sale, can you get your earnest money back?

Asked by Allen Gero, Parma, OH Thu Mar 24, 2011

short sale offer taken by seller but bank continues to sit on the offer and we have a lease and need to move out by June, can we resend the offer and get it released by the seller and get our ernest funds back....

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3
Tim Moore’s answer
Since you are calling it an offer, and not a contract, it is obvious that there has been no agreement with the sellers bank and that is required in a short sale. If the bank has not agreed, and signed the offer, then you have no contract and you should not have even given your agent any money yet since you do not have a contract. Your agent should be able to just hand you back your check, I never deposit them until we have a signed and agreed contract with signatures from buyer, seller and bank. You or the bank can walk away at any time.
0 votes Thank Flag Link Thu Mar 24, 2011
Just so this question doesn't sit out there with answers that violate licensing law for anybody reading through these looking to resolve their own questions, I would like to answer this, despite the age of the question.

First, license law requires that when a Realtor collects a check from a client, that check is to be deposited immediately into the broker's non-interest bearing account. Realtors are NOT permitted to "hold" checks. That is why we use Promissory Notes. If your Realtor does not intend to collect the money yet, he or she will have the client sign a Promissory Note, which is a promise to pay at a future date and describe in the offer the conditions that must be met before the note is collected.

Second, if the seller has signed the offer, regardless of whether the bank has approved it yet, you are under contract with that seller. The property is in "Contingent" status, which means that you have a contract that is contingent upon certain conditions being met, whether that would be bank approval, a satisfactory home inspection, and/or loan approval.

Your contract states that all parties will, in good faith, make every effort to cause all of the conditions to be met to complete the transaction. If you withdraw from the contract without good cause, good cause being that the bank declined the offer, the home inspection failed or the lender declined you for financing, and a good faith deposit had already been collected from you, you do stand the risk of losing your deposit to the seller.

The seller must agree to release you from your contract with them and must agree to return that deposit to you. The seller may release you but make a claim for the earnest money, in which case, you may have to arbitrate to have it determined who will receive that money. If your agent has collected money from you and has not deposited it to the broker's holding account, and the seller declines to return your earnest money deposit, he or she can not only be on the line for that money but has also created a situation that puts his or her license in jeopardy.

I hope this clears up any questions and corrects any misinformation that was stated previously.
0 votes Thank Flag Link Mon Feb 23, 2015
As for getting your deposit money back--much will depend on your contract, therefore review the document as the answer can be found in it--what is your agent and or attorney advising...
0 votes Thank Flag Link Thu Mar 24, 2011
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