Question Details

Noelle, Home Buyer in Hayward, CA

Need advice re: getting my deposit $ back from a cancelled house sale- is there a time limit?

Asked by Noelle, Hayward, CA Thu Jul 24, 2008

We made an offer on a bank owned house contigent upon the findings of the house inspection. We paid a 5% deposit that is being held by a title company. The inspection brought up NUMEROUS, hidden, expensive and extensive repairs required to even make the house safe and livable. We cancelled the sale within the allowed time frame, and signed a Cancellation of Contract/Release of Deposit and Joint Escrow Instructions with our agent who then sent it to the selling bank to sign. The selling bank briefly contested our cancelling the sale, but finally conceded that we followed all rules and timelines. After waiting for over 2 weeks, we still have not received our deposit $ back, the title company says they have received NO instuctions yet. Is there a time limit in which the selling bank MUST refund my money? If so, what is my recourse? We have a pending offer on another house and we need this $ ASAP! Help! Thanks for any helpful advice.

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Hello Noelle. I can only tell you what the general rules are in CA. I see you are in Hayward, but I don't know if it's the Hayward in the San Francisco Bay Area or another area.

If you are entitled to your deposit money back (and from what you are telling us here, the bank conceded that you acted in a timely fashion), then the bank should sign the release within a reasonable time. Although most contracts provide that the deposit money be returned upon cancellation (in a timely fashion), the contracts do not include the necessary escrow instructions that would trigger an automatic release of the funds upon cancellation. This is the reason why the title company can't send you the money until the bank signed the release form. Banks act very slowly and they know that not much will happen to them if they don't act quickly. I would suggest you have your agent call the bank daily and if they don't sign the release by the end of a week, hire an attorney. It's unfortunate that you may have to spend money on an attorney to get your deposit back, but your options are unfortunately limited. Good luck to you.
0 votes Thank Flag Link Thu Jul 24, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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So sorry to hear all. The executed contract SHOULD specifies exactly what takes place during your option period, at least Texas contracts do. Banks are extremely overwhelmed with all kinds of paperwork it delays HOWEVER the contract should specify a certain # of days and the realtor/title company know this. Do you have a written statement from the bank? The title company is the only party that can release the funds. Forward a demand letter to listing agent broker/bank/title company certified letter returned receipt. Stating exactly what the contract states. CERTIFIED letter return receipt will be "anchored to court documents" all parties received notice. I would provide a time limitation for the return. If all else fails work with an attorney, http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Thu Jul 24, 2008
I was actually in a similar experience as this and I contacted one of the California Association Of Realtors attorneys which are available for the Realtors for free in California. The pressure should be put on the title company, we had to tell the escrow company in my situation what is there policy on the deposit being returned if they do not receive a signed cancellation back from the seller in a reasonable amount of time. Within a few days we received it. The lawyer also said that the worst scenario would be a small claims case on the seller and title. Usually bank owned properties just want to move on and get it sold, it could be also that someone is just sitting on it and needs a push. The bank owned asset management companies are all extremely busy. Hope this helps :)
Web Reference: http://www.soldbypeter.com
0 votes Thank Flag Link Thu Jul 24, 2008
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