Did you submit your offer with a Short Sale Addendum (SSA)? Did your agent check the box in paragraph B.2.?
Without this protection, the offer you submitted on the Residential Purchase Agreement states that your check "shall be held uncashed until Acceptance and then deposited withing 3 business days after Acceptance with Escrow Holder" (see Paragraph 2.a. on page 1) and the listing agent is within their rights, if the seller signed the acceptance of your offer, to open escrow and deposit your intial deposit check.
If you did submit the SSA and you did check the box in B.2. then you have instructed the Seller and his agent that your Deposit Check will be "held uncashed until the Day After Seller delivers to Buyer a wrwitten notice of Short Sale Lenders' consent."
This is why it is really important that you work with an agent who understands the short sale process when you are making offers on short sales. If you failed to submit the SSA or failed to check the box in B.2. then you should have your realtor try to negotiate this document into the deal at this time. (Of course, I am not an attorney, and this should not be construed as legal advice. If you have any concerns about your legal rights in this situation, please make sure you speak an attorney who can help you with these matters.)
Most listing agents are reasonable people. If it was your understanding that the transaction was not "accepted" until the bank accepted the short payoff, have your realtor communicate this. Perhaps you can resolve the issue with a phone call or two.
Best of luck in finding a great home, at a great price, and negotiating a great deal, and Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty
In our state we are obligated to get the earnest money check deposited within one working day. So as soon as you give the check to an agent, they have to deposit it.