Home Selling in 92653>Question Details

Annette, Home Seller in 92653

The buyer of my house pulled out of the sale 4hours short of the closing of escrow. I have been informed the I, the seller, does not get the

Asked by Annette, 92653 Mon May 31, 2010

security deposit. Why. The seller has devestated me by this.

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Annette:

You need to check your contract. If your agent represented both you and the buyer, then go to your agent's broker to see why you are not in a position to keep the good faith deposit (GFD). The problem when agents represent both the buyer and seller is that it is hard to be fair to both and look out for the best interest of both. The broker, after reviewing your documents, should be able to give you a truthful answer. If your agent is also the broker (and represented the buyer), then you might want to have an attorney review your documents and tell you if you have a right to keep the GFD.

Two things you should be aware of:
1. If the buyer signed loan documents, even if they did not actively waive the contingencies, you might have a good argument that the signing of loan documents is equivalent to removal of contingencies.
2. Refusing to release a GFD, when you have no right to keep it, could subject you to legal action and/or penalties.

This is why it is important to find out what your rights are under your contract. Either the broker of the office that represented you (since in California, technically, your listing is held by the broker, not the agent that wrote the listing agreement) or an attorney who has real estate law experience should be consulted before you do anything that might damage you. If you need a referral to an attorney, please feel free to contact me. Dare to Dream.

Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
3 votes Thank Flag Link Mon May 31, 2010
Hi Annette,

How is it all going? did you work it out? We all love to know if things work out alright. Since you asked your question in May, if you are still sorting this all out, please contact a real estate attorney to help you!

But I'm hoping all is well....but fill us in :)

Karen
1 vote Thank Flag Link Tue Jun 22, 2010
Escrow will still have you sign a form to release the deposit to the buyer. You can just NOT sign that form, the buyers' earnest money will just sit at escrow, regardless of what the contract might state, until you & the buyer can work out an agreement.

Partial monies may go to you. Depending on whether your contract was/was not written on the newly revised purchase agreement, it's either on page 5 or 7 now,,,there's a whole section dedicated to Mediation & Arbitration options.

You may find that going to a mediation would be a good idea. Our Board of Realtors can set up a mediation meeting for you all to come to an agreement about what should happen with the buyers' earnest money.

EmilyKnell1@yahoo.com
562-430-3053 cell
1 vote Thank Flag Link Mon May 31, 2010
Have your Realtor review the purchase contract with you. Did the Realtor act in "Your" best interest when the Residential Purchase Agreement was submitted or just want to push the deal through to closing, in this case a failed closing, to get a commission.
1 vote Thank Flag Link Mon May 31, 2010
Annette -

You said; "The buyer of my house pulled out of the sale 4 hours short of the closing of escrow. I have been informed the I, the seller, does not get the security deposit. Why. The seller has devestated me by this."

Why did the buyer back out? They must have had contingencies in place. What is your agent saying? Did the same agent handle both side sof the transactiuon?

Until you find out the answers, you shouldn't sign a "Cancellation fo Contract and Release of Earnest Money" .

Thom Colby
Broker / Owner
Thom Colby Properties
Southern CA
1 vote Thank Flag Link Mon May 31, 2010
Did the buyer remove their contingencies? If they did not, and they canceled their contract through one of the contingencies, than they did not breach the contract, and you are not entitles to liquidated damages.
Did they sign liquidated damages?
Talk to your Realtor.
1 vote Thank Flag Link Mon May 31, 2010
There is a section in the contract that says that if the buyer defaults then the seller gets to keep the security deposit. If both buyer and seller initialed there then you the seller should get to keep the deposit. If only one or neither of you signed there then you do not get to keep the deposit. Your agent should have explained that to you while you were going through the contract.
Web Reference: http://www.stacy-nelson.com
0 votes Thank Flag Link Thu Feb 17, 2011
Hi Annette,

I would ask your listing agent and your escrow company the circumstances why they cancelled. If there was no legitimate reason, you should be entitled to their earnest money. I would doubt it was a mortgage issue, since you would have a mortgage commitment before the escrow company would schedule the closing. I would recommend you and your Agent look into this further.

You have every right to be upset and realistic claim on the Buyers earnest money.

Best of luck,

David Jaffe-SRES, CDPE
Realtor-Coldwell Banker
0 votes Thank Flag Link Sun Nov 21, 2010
Annette I am sorry for your disappointment and having to change your plans. I agree with all below..however
you can call your agent and the escrow company you were using to find out why you will not be receiving any compensation for your troubles. Please re read the Residential Purchase Agreement, counter offers and addendums.

Wishing you a Great Buyer
Web Reference: http://www.raquelunger.com
0 votes Thank Flag Link Sun Nov 21, 2010
Why did they cancel, how did they cancel? Did they send you an addendum to the purchase contract? 4 hrs is aweful short notice. However, it is was a loan contingency, they would be entitled to keep their earnest money. I would get on the phone and get some answers from the other agent and regardless of who keeps earnest money, get it back on MLS ASAP.
Did you get a copy of the home inspection, termite report, and or appraisal? The first two here in Arizona we are entitled to, ask for copies if you don't already have it and I would leave it out at the property and list on MLS. That will save the next buyer and or at least they can see what they are dealing with. Did it appraise or appraise for more, would mention that too. I doubt you can get a copy of the appraisal cause techically it belongs to the buyers. Sorry, but you can get some good out of this and still sell the house.
0 votes Thank Flag Link Sun Aug 1, 2010
Hi Annette,

Sorry to hear the bad news, but I must concur with the other answers given. It really depends on what is spelled out in the purchase agreement. It also depends on why the seller canceled. They could have exercised one of their contingencies. The best thing to do is to just focus on getting yourself another buyer. I would advise if you are working with an agent to have your agent accept back up offers in the future to help remedy these types of situations.

Best Regards,

Michael G. Grimm
949-528-5825
0 votes Thank Flag Link Fri Jul 16, 2010
That is very disappointing and frustrating. A deposit for a purchase is an earnest money deposit. The contract you have should spell out the conditions, terms, and contingencies of this deposit. You have an agent who should be discussing this with you and if you don't get resolve bring in the Broker and consult an attorney.

It is often misunderstood that the earnest money automatically goes to the seller when the buyer defaults. But that is not the case. It is a contract and disputes in the contract are either mediated, litigated or arbitrated. To receive the deposit one needs to prove damages. Also, the agents to the contract may also be entitled to damages. That is why this question doesn't have a general answer and you need to go to the sources who have access to the legal entity (your contract).

Best of luck to you.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Mon May 31, 2010
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