Short Sale Property was not properly maintained while under contract leading to a mold condition. Who gets the deposit that is still in escrow?

Asked by samsacc, Suffolk County, NY Tue Aug 6, 2013

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Dan Tabit, Agent, Issaquah, WA
Tue Aug 6, 2013
Samsacc,
Thanks for the extra info. When it comes right down to it, your attorneys still have more facts than we do. Pursuing this in small claims is an option. The filing fees are low and you can make their lives difficult for a while, if you don't mind the difficulty too. It's really just up to how much hassle your time is worth. It sounds like the home was not maintained as agreed, but again your attorney can best advise you.
0 votes
samsacc, Home Buyer, Suffolk County, NY
Tue Aug 6, 2013
Went to an open house in early 2012. The realtor insisted we sign a dual agent agreement before she would submit our offer to the bank. The home inspection went well and found no major issues and no mold in the house. Two days before closing we did a walk-through and found black spots all over the rug leading from the utility room in the basement. Our realtor who is also the realtor for the seller told us it was soot from boiler serviceman. Upon further inspection we found mold 3 feet up the new sheet rock wall. I also found the basement window propped open. The house had been vacant for at least two months. The bank offered us a $5000 discount for the mold but we had two small children with asthma and we were not interested in the house with a mold issue. My lawyer sent a letter to their attorney telling them that we were no longer going to buy the house and demanded a full refund of our earnest money. The sellers first threatened to sue for damages and we responded with the same then they offered to split the money between two parties. My new realtor informed me that since this was a short sale, the sellers were not entitled to any profit from the sale. Six months later we bought our first home and the seller sold their home. My attorneys advice was that it would be too costly to sue them but I could go to small claims court to get the escrow released. Over the last three months I've been contacting the sellers attorney asking them asking him to release the money since the property is sold. The sellers attorney said he can't release the money until the sellers agree to the release and since they have not I am considering going to file a small claims suit.
0 votes
Ray Akers, Agent, Seattle, WA
Tue Aug 6, 2013
Without more information it is impossible to advise you. Look first at your contract for the answer. Did you buy the property 'as-is'? If not, then the seller may be responsible for delivering the property in the same condition which you first observed.

After reading your contract, if the answer is not readily apparent, then you should consult with an attorney who specializes in real estate. Your agent, or the Managing Broker, can probably refer you to an attorney with whom they've had a good experience. Good luck.
0 votes
It was as is but my attorney said they still must maintain it. Please se my post as an answer for the rest of the details.
Flag Tue Aug 6, 2013
David C. Abe…, Agent, Seattle, WA
Tue Aug 6, 2013
Most contracts state the property must be in the same condition at closing as in at time of contract. In most markets, the buyer does a walk through just prior to closing to make sure conditions are the same and any repairs were made as agreed upon in the terms of the contract. If there is damage, the buyer can refuse to close until the conditions are repaired. But this opens a can of worms consisting of what is "repaired" in the seller's mind compared to the buyers. Monies (21/2 times the repair amount is a norm in some markets) may also be held by the buyer until repairs are made and closing can take place as scheduled. In the case the seller does not make the repairs by the agreed repair date, buyers gets the held funds to make the repair themselves.

Contact me or an agent in your market area for further information on transactions.
0 votes
Dan Tabit, Agent, Issaquah, WA
Tue Aug 6, 2013
Samsacc,
Your contract probably says the seller is to maintain the home. The question comes up, was the mold there before, so the essentially maintained it or was it new. Assume it was new and the seller's didn't maintain the property. You can consult an attorney and pursue the seller's for a remedy, but remember they just did a short sale, so that implies they have a financial hardship. What could you get if you're successful?
Finally, the bank had no knowledge of the property they only agreed to release their lien for less than what is owed.
Ultimately you will need an attorney to review your contract and advise you. Did you close on the property? Are you rescinding your contract short of closing for a reason contained within the contract?
0 votes
Thanks Dan. I posted more information as an answer so everybody can see it.
Flag Tue Aug 6, 2013
Mary Austin, Agent, Kirkland, WA
Tue Aug 6, 2013
I recommend reading what the contract says, and everyone refraining from giving legal advice.
0 votes
Ron Thomas, Agent, Fresno, CA
Tue Aug 6, 2013
You had a Realtor representing you in the Shortsale Offer;
why are you not listening to him?
0 votes
Get a lawyer. You should never work without someone on your side.
Flag Tue Aug 6, 2013
The Seller's broker required we use them as a dual agent.
Flag Tue Aug 6, 2013
The seller's broker required us to use them as a dual agent.
Flag Tue Aug 6, 2013
Ann.ferguson, , Lynnwood, WA
Tue Aug 6, 2013
We need some details. Are you talking about the earnest money? Are you the buyer and intend to walk away from the contract based on the mold issues? Your contract should state that the seller is obligated to maintain the property in the condition it was in at the time you made the offer. If this is a new issue (mold was not present/not disclosed) at the time of the offer and has been caused by leaking pipes, a roof leak, etc., you should be entitled to the return of your earnest money.
0 votes
I was the buyer. During final walk through we saw black spots on the rug in the basement. The realtor told us it was soot from a boiler service. Upon further inspection, we found mold three feet up the wall and someone had propped open the basement window. Our home inspection found no leaks or mold in the basement
Flag Tue Aug 6, 2013
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