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
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 :)
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.
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" .
Broker / Owner
Thom Colby Properties
Did they sign liquidated damages?
Talk to your Realtor.
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
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
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.
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.
Michael G. Grimm
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.