Home Selling in New Jersey>Question Details

rich, Home Seller in Cherry Hill, NJ

Investor backed out. We want their deposit. Agent Not Helpful.

Asked by rich, Cherry Hill, NJ Mon Dec 2, 2013

We have a horror story that involves our agent who found a cash investor who promised a pain-free, quick close. Awesome! Then, at the last moment (the day of settlement) he backed out agreeing he was in default. I asked about the deposit and now my agent, who all along assured us it was a simple matter to get, is saying the buyer needs to sign off for us to get it. We can't afford an attorney so we trusted this highly regarded agent. Are we screwed?

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Well - you know Rich, here, in northern NJ, buyers and sellers routinely use attorneys to handle our closings. I know that is not done in the southern part of the state, where the title companies handle them.

This is one of those times that living up north would have worked in your favor, as you would have had legal representation in place already.

Here is the situation...read your contract!

See if there is a mention of the deposit being used as "LIQUIDATED DAMAGES".
What this means, is..in the event of a default/breach of the contract, which you seem to have, the deposit IS turned over to the seller and may be kept to cover their damages. There is no right, however, to sue for any more than the deposit amount.
By the way - how much is being held?

If your contract doesn't mention "liquidated damages" (and our "northern" contracts usually do NOT), then it means you have the right to use the court system to go after any actual losses. You may not know what you total losses are until you're able to sell and close on your home.

Now - you say your agent told you it would be a "simple matter" to get and keep the deposit........why not ask him or her how this is to happen.

Since we use attorneys, here, this situation would easily be covered.
Quite honestly, you very well may have to seek legal counsel, but, the good news may be, you may be entitled to collect legal fees as part of the settlement.

It is certainly worth a call to an attorney if the buyer doesn't cooperate in releasing the deposit to you.

Best wishes...........
0 votes Thank Flag Link Wed Dec 4, 2013
First off.. Good Answer Deb....

Second, try to get the deposit as noted. If not, get an attorney. Pronto.
Flag Thu Dec 5, 2013
Thanks. The agent's company (Fox -- Now Berkshire) is holding the deposit and not a third party. They claim they just have their own form that they need signed by both parties but the investors from the other group are all claiming someone else is responsible and won't sign. However, as noted, our addendum (which they signed) clearly states that if we didn't close on the 2nd, they agree that they forfeit the full deposit. The agent also says we're clear to sue for full damages and that they intend to help us with that as they're out as well.
Flag Wed Dec 4, 2013
Go over the contract, terms and conditions of the earnest money should be outlined.
0 votes Thank Flag Link Wed Dec 4, 2013
In NJ the law states that the deposit must be returned to the buyer. However, you definitely have means of recourse legally. You can file in court for specific performance which forces the buyer to go through with the contract (very rare this goes through), or most likely you'll sue for compensatory damages. These costs could include the difference in sale price between what you're contracted at and what the final sales price is, hold costs of taxes and all expenses, etc.
0 votes Thank Flag Link Wed Dec 4, 2013
Hi Rich,
As the other agents have said here both parties need to sign the release paperwork in order for the deposit to be released from the broker escrow account. It is unfortunate that this happened to you so late in the process. I did see that your home is back on the market. I will keep it in mind for any of my Cherry Hill buyers.

Barb Saccomanno
Remax Main St.
Moorestown, NJ 08057

(856) 313-0088
0 votes Thank Flag Link Wed Dec 4, 2013
I can't really address the details of how it works in New Jersey... but the fact that the buyer and seller both have to sign in order to release the earnest money seems to be universal.

It may sound like a big deal, but if you think about it.. you wouldn't want the e.m. to be released without both signatures... after all, what if the buyer said they wanted it back, and didn't need your signature??

You may not need an attorney.. just submit the paperwork... if the investor has admitted that he's in default, he may be willing to simply sign the release.
0 votes Thank Flag Link Tue Dec 3, 2013
Alan May, Real Estate Pro in Evanston, IL
Where is the property maybe I have a buyer?
0 votes Thank Flag Link Tue Dec 3, 2013
Cherry Hill, NJ. 1017 Red Oak Drive.
Flag Tue Dec 3, 2013

As noted both parties must agree on the release of the deposit. From experience, at this pointy ou would have to file a legal complaint to get the deposit. The agent has no bearing in the discussion about the deposit goes to and cannot just release the monies to you. Seems like you do not have a choice but to seek legal advice. In my experiences I have seen attorneys negotiate a fair amount or all of the deposit. It is not that simple, espectially if the buyer is reluctant to let the money go.

In your next transaction make sure you have an attorney do the closing. Attorney costs vary, but can be $750-$1000 and it is worth the money to be protected.

At this point you have nothing, so talk to a real estate attorney and pay him out of what you get.

Hope it works out.
0 votes Thank Flag Link Mon Dec 2, 2013
Not necessarily. Your agent should prepare a release that states the escrow deposit will go directly to you as the seller. They should have 5-7 days to sign it (sent certified mail) If they refuse to sign the release the money will sit in th escrow until both parties agree. How much was the deposit and why did he cancel. They may be in a breach for other damages as well.
Web Reference: http://Www.njrealtorjan.com
0 votes Thank Flag Link Mon Dec 2, 2013
Guys, in PA damages like these are doubled. Does anyone know if that's the case here? If I read it right it appears Special Civil (small claims) is $15k. If it doubles if $15k the max or does it double over that limit?
Flag Mon Dec 2, 2013
If you sue and have court to hold deposit and allow the courts decide, instead of the escrow holder /prob broker to continue to hold. they cannot release money unless directed by both parties, but the courts will hold it or direct the release... That should put a scare into them to at least deal. Dont forget to add your costs plus damages..
Flag Mon Dec 2, 2013
Its never easy to get the escrow. maybe a larger escrow on a deal such as your in the future. Unfortunately . You sound like you have a good case to get the money but it will have to be treated legally. they will prob bargain because the damages you would get, and you will likely get them... will not want to be on their default. Nothing is perfect in law... and especially in court.
At least you got a full tank of oil They cant take that unless you signed to allow them to...
Flag Mon Dec 2, 2013
What bugs me most is that OUR rep reassured us time and again that this was an investor they knew, that they verified their funding, that the deposit was EASILY gotten if it went south. None of it was true. We feel used.
Flag Mon Dec 2, 2013
It's clear to us they're in breach and for many damages. They bailed because they couldn't get all the funds together at the end. One of the partners (that we never were told about) pulled out on settlement day. They then signed a agreement for 5 days agreeing to a penalty each day plus expenses. Then they signed a final agreement after the 5 days for one last extension agreeing to pay our mortgage payment and more expenses. They even put oil in our oil tank. On the last day then sent a appraiser through and we found out later the plan was to leverage the equity for a line of credit. When it came in lower than they needed (but MUCH higher than the purchase price) they backed out.
Flag Mon Dec 2, 2013
The money is in escrow... If you dont sign and the buyer does not sign then it sits there... The buyer has to sing a release of escrow... and you would have to sign the same form...

You can bargain with the other side if you do not want to go to court... such as ask for 50% or more... you may not want to but may be your best chance to a speedy remedy... to get an attorney would prob require retainer of $3000-$5000 unless you know someone...

Is the default admitted in writing?

simple small claims case.. also damages.

This is a legal question and you wont get much more than general info such as what I have given which is not meant to be considered legal advice. . We in this forum cannot provide legal advice.

Good luck!

Search Short Sales and foreclosure Deals at http://www.BuyNjShortSales.com

Larry Sarlo
RE/MAX Preferred
0 votes Thank Flag Link Mon Dec 2, 2013
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