Can a seller ignore contract after accepting offer and having buyer sign?

Asked by Mbf, Takoma Park, MD Wed Jun 25, 2008

We put an offer on a bank owned property and they accepted. They presented us with the contract and we signed. They were rushing and requested a closing of July 11, which we moved to July 18th. We returned the contract to the listing agent 10 days ago. The bank (seller) has not signed the contract and the listing agent has not heard from them in 3 days. We have given them a $2000 earnest money check, and, on THEIR urging, conducted the appraisal and home inspection, and paid for underwriting, totaling about $1200. Is there anything we can do? Has anyone heard of this happening before? Is there a deadline by which they need to sign the contract? We don't want to walk away, but we are feeling very uneasy.

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Jordan Mossa, Agent, Danville, CA
Thu Jun 26, 2008
Buying homes from Banks, lenders, REOs, short sales...the process is time consuming. One must be patient and understanding. The Banks and lenders have procedures that need to be followed. Three Days is nothing stress about. Give it two weeks then ask your agent to place a follow up call.

No worries....
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William Metz…, , Portland, OR
Wed Jun 25, 2008
First, whom did you make the earnest money check payable to? If it was payable to broker's or escrow company's trust account, all may not be lost. Real estate sales agreements are primarily receipts of earnest money deposits, at least where I've lived in Nevada, California and (now) Oregon. The terms on who receives the funds should the deal fail is pretty clearly spelled out. Your inquiry indicates that the contract wasn't even executed by both sides, which suggests to me there was no contract and the earnest money is probably refundable (absent other circumstances I'm not aware of).

I can't imagine a bank, even in a short sales or REO transaction, would encourage a potential buyer to spend money without a signed contract. Did the bank tell you this, or did the agent tell you the bank was applying pressure? If your information came from the agent, you might want to make some kind of demand from the agent's brokerage firm for the money you spent after relying on the agent's representations.

You may want to seek legal advice at some point, but I always urge people to ask the other side before calling a lawyer. Even if the bank or the brokerage firm may not be technically at fault, either of them may want to make some kind of settlement and avoid the ill will.
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Bruce Lemieux, Agent, Gaithersburg, MD
Wed Jun 25, 2008
Hi Mbf,

When purchasing a home from anyone -- bank or otherwise -- you shouldn't spend a dime until the contract is fully ratified. To be fully ratified, both buyer and seller must sign off on all documentation and the contract must be delivered to all parties. All of your appraisal, financing and inspection contingencies are from the *ratification date*. If you didn't receive a copy of all signed paperwork, then you don't have a ratified contract.

If the listing broker cashed your check without ratifying the contract, then I believe that you can go after them, so #1 see if your check has been cashed. In any scenario, get a real estate attorney. Worse case -- the bank accepted another offer. If so, and your check as been cashed, I would think you would get all of your money back from the listing broker. Best case, you'll get a response from the bank and you'll be able to move forward with your purchase.

Especially working with short sales and bank owned properties, you really need an experience buyer's agent to be your advocate.

This sounds like a rotten situation for you. Good luck.
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Jeff Escher, Agent, Rockville, MD
Wed Jun 25, 2008
You need to have your title company attorney directly involved in handling this issue. If the bank has not signed the offer, then there is no contract - and your deposit should never have been cashed.
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