Let me explain how this usually works. If you used the CAR residential purchase agreement, see LIQUIDATED DAMAGES â€“ Section 16 which states: â€œIf Buyer fails to complete this purchase because of Buyerâ€™s default, Seller shall retain, as liquidated damages, the deposit actually paid. If the Property is a dwelling with no more than four units, one of which Buyer intends to occupy, then the amount retained shall be no more than 3% of the Purchase Price. Any excess shall be returned to the buyer.â€ (On the San Francisco Purchase Agreement, Liquidated Damages is under Section 29 - same wording as above.)
In this situation, per the contractual agreement, the 3% deposit amount is automatically kept by the seller.
However, note that this clause may not limit your financial obligation if the Seller claims further damages. If the Seller decides to pursue a claim through mediation or arbitration, the Buyer could end up being liable for an even larger amount than the 3% liquidated damages.
It is important to know when you are in or out of contract, because the liquidated damages apply only when you are in contact. For example, if your ratified contract states you have 10 days to get inspections or 21 days to obtain financing, and those days come and go without your removing your contingency, you are technically out of contract. Whenever you have a counter-offer on the table, you are out of contract until you agree to the terms of the counter-offer, or you counter the counter-offer and the other party agrees to the new terms of the counter-counter-offer. Confusing â€“ but your Realtor can clarify how the contract works.
In your case, it appears the lender countered your original offer with at least two changes in contract terms: a higher purchase price, and a $10,000 non-refundable deposit. If you agree to these terms, you could be entering into a binding contract that would supersede the terms of your original purchase agreement. One option would be for you to counter this offer by agreeing to the higher price but stating you only agree to a non-refundable deposit equal to 3% of the new purchase price.
Congratulations on having such a great credit score, but this has nothing to do with the deposit. The deposit just validates the sincerity of your offer.
Donâ€™t know who you are using for escrow, but Old Republic Title has an excellent program for Short Sales; I would refer you to call Lynde Black at 707-566-4215 to discuss your transaction.
Again, be sure to check with an attorney to understand your rights and obligations, especially if your situation is not covered by the boilerplate language in your contract.
The bank (1st Federal Bank of California) has now said the house will go to the courthouse steps for auction on August 20th. My offer was 420k and they will be asking 430k on the auction steps. My agent says there is no possible way they will get this amount (she thinks my offer was high).
1st Federal Bank of California has wasted an enormous amount of my time and it sounds like I have no recourse. They have also wasted both of the real estate agents time, their own office staff time AND the previous home owner is now filing for bankruptcy... All for the gamble of making a little more then an additional 2% on the home.
I know many real estate agents are writing Congress about how the banks are treating the average person. Most notably how they are now taking investor cash offers for homes over us â€˜non-investorsâ€™ (who want to actually live-in and strengthen our communities) because itâ€™s â€˜easierâ€™ for the banks. If any of you are interested, please feel free to use my experience and/or this banks name in any way you like.
All the best,
I'm not a lawyer, bit it would seem reasonable that if you willingly capitulate to the non-refundable deposit and then seek legal recourse a decision in your favor has a reduced probability.
Do not agree to a non-refundable deposit. The whole pupose of an inspection contingency or a financing contingency is to allow you to withdraw from a contract without penalty.