I also want to add to my first post that the contrct is over if the times expire or the counter is not accepted. When you rejected their counter either by notification or by letting time elapse the contract was over. It can be re-instated by addendum if the buyer wants to proceed.
Disposition of the earnest money will wither be dealt with at the broker level or, depending on your contract, go to arbitration.
In NJ contracts the sale is contingent on a satisfactory inspection and if in fact the seller's just arent responsive to do appropriate repairs to satisfy the buyer, oh well. Its a shame to lose a deal but the buyer should be happy with their purchase and the sellers should be happy to have a buyer who wants to buy their home, its a no brainer.
Hope my opinion helps
Any experienced agent has been through this scenario. I always try to prep my buyers by letting them know that it is possible the seller will reject their entire repair request and that we need to move through the part of the process with as level head as possible and to keep the goal in mind ... getting this house for the right price & terms.
nevertheless talk to your lawyer. Do you have one?
I would agree with the first couple of responses. Once the sellers sent you their response and it was signed and rejected, you are no longer in contract. When the LA then came back with a different response, it was the seller coming back to you with an offer to your clients. You do not have to respond to this, but as our colleagues previously stated take it to your broker at once. Your clients do deserve their EM no matter what the LA or sellers believe.
Best of luck getting this handled quickly and make sure that your clients are aware of what you are doing on their behalf each step of the way!
Obviously this needs to go to your broker for the real decision on how you should respond. Mu opinion having heard your side here and from the chronology I can get is you are still in contract and everything that has gone on up till now is negotation and your client has won.
The seller has agreed to take care of everything and you need the seller to release (mutual release) the funds to cancel escrow. So depending on your contract and other contingencies your client needs to let his frustration go relaize that it was a successful move and since he got what he was asking for proceed.
Please let us know what your broker says and what happens.
This actually relates to the post about people getiing insulted or angry over the other sides response.