Can i lose my deposit if i back out after removed contingencies?

Asked by Maycontract, South San Francisco, CA Thu May 13, 2010

We started the contract over 30 days ago, we have done inspection and removed inspection contingencies. Then the property doesn't appraised, $50k under. We were promised renegotiation in price, instead agent put pressure on us to remove loan contingency. We did under tremendous pressure. Within 24 hours we rescind our offer and our agent threaten that we could lose our deposit. 1)What right do we have? We feel that we have been tricked into this. We were told there was another buyer with higher bid, but seller never gave us notice to perform. Then we were pressured to remove contingency. 2)Do we have to right to request to see the backup offer? 3) Can we lose all of our deposit?

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7
Jesse Madison, Agent, Rancho Santa Margarita, CA
Fri Aug 27, 2010
There are some good points on here. I agree with comments below:
There should be an appraisal contingency in place. When you removed your contingencies did you check that you are removing all buyer contingencies? If not then you should have a good case for getting your deposit back.

You should contact a real estate attorney to review your contract and contingency removal. Start with the broker and then the attorney if it is not resolved.

Good luck,
Jesse Madison
Madison Realty
0 votes
Ricki Lynn M…, Agent, San Diego, CA
Fri May 14, 2010
Good Morning.
Did your agent check the appraisal contingency box? If not, then your contract to purchase is contingent on the property Appraising at no less than the specified purchase price. If it appraised at $50K less than sales price, than you should have a contractual reason for cancelling the contract. I would tell your Agent and their Broker that you are going to contact a Real Estate Attorney. Make sure you have a copy of your contract and any counters/addedums when you go see the RE Attorney.
When you get this resolved, please let us know what happened.
Thanks and Best of Luck.
Ricki
0 votes
Steven Ornel…, Agent, Fremont, CA
Fri May 14, 2010
Hi Maycontract,

In my response to your prior question here:
http://www.trulia.com/voices/Home_Buying/Hello_We_made_an_of… I suggested you speak with the Agent and their Broker (at the same time) to expose the situation to the Broker. You should make this call today, meet over the weekend, and if you cannot arrive at a solution consult a RE Attorney on Monday.

When using the CA CAR Residential Purchase Agreement you have the three basic "investigative" contingencies (loan, appraisal, inspections). Once all of these are removed, and assuming there is not any misrepresentation or fraud, you will likely lose your deposit to the Seller if you back out due to Para 16’s Liquidated Damages clause of the contract.

Also note the CA CAR Residential Purchase Agreement has a "mitigation of legal risk" protection via Para 17B2. While Para 17 (Dispute Resolution) speaks to the arbitration and mediation of disputes, Para 17B2 limits any potential court action to the jurisdiction (read level of damages sought) of a certain types of legal claims. If your damages fall within Small Claims Court jurisdiction ($7500, I believe) you can investigate this avenue for getting back your money. Consult a RE Attorney for all your options in this case, only you know all the details.

Your situation has reached a point where trying to obtain information from the various Agents on Trulia may be working against you. Schedule the meeting now and seek professional help if a course of action cannot be agreed upon while meeting with the Broker/Agent.

Best, Steve
0 votes
Bill Mccord, Agent, San Jose, CA
Fri May 14, 2010
Yes. Based on what you have told us you might lose your deposit. It depends on exactly how your contract was written, and the sequence of events leading to where you are now.
The 1st thing to understand is that you are in California, and your contract will be in accordance with California Law. Every State has it's own Real Estate Law, and contracts conforming with it. Well intentioned advice from other States may not be relevant here.
You may wish, and indeed need to consult an attorney in this case, but it is a pretty routine situation with all the issues you raise governed clearly by the Purchase Contract you signed. If your agent and or Broker cannot thoroughly explain your options under that contract, then you take all the paperwork to a Real Estate Attorney.
Good luck
Bill
0 votes
Jim Starwalt, Agent, Grayslake, IL
Fri May 14, 2010
May, just like Bill and Scott have said, you definitely need an attorney to help you with this matter. One additional question, are you using the sellers agent? Dual agency is fine and sometimes beneficial, as long as it is fully disclosed to all parties, and all parties have acknowledged this in writing. Assuming undisclosed dual agency, you can put huge pressure on the agent!
0 votes
Bill Eckler, Agent, Venice, FL
Fri May 14, 2010
Backing out of an executed contract can be tricky and costly............In addition to your contract language that should be reviewed by an attorney relative to your plans you appear to have a number of additional factors that could enter the picture.

Seek the advice of an attorney......

Best of luck,

Bill
0 votes
Scott Miller, Agent, Boca Raton, FL
Fri May 14, 2010
Hi May,

Please tell me that you have an attorney representing you.

I will not close a buyer nor seller without an attorney to review documents. I have so many posts here on Trulia about the importance of having an attorney from the BEGINNING of your transaction, to represent you and work in YOUR interest. An attorney wouldn't have let anybody pressure you, especially your 'agent'.

I can't stress enough the need for an attorney. I don't care how many transactions people do, there can always be a bump, a glitch, something that leaves you open for lawsuits, lost deposits, etc.

Attorneys charge as little as $300 to review a standard real estate transaction. Realtors, agents and brokers ARE NOT lawyers. Can you think of any better way to spend $300-500 in a real estate transaction?

Go find an attorney fast, get a recommendation from your local Reator's Board, hire them, and tell them where you now stand in this transaction.

Never close without being legally represented.

GOOD LUCK, let us know how this turns out!

Scott Miller, Realtor®
Estate Specialist
Commercial RE
Business Broker
Realty Associates
561.716.4060 direct
561.451.9377 fax
http://www.trulia.com/profile/scottmiller/
http://twitter.com/ScottSellsFL
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