We were in escrow on a house as buyers; however, we elected not to buy when we discovered some shady business

Asked by Megan, Long Beach, CA Fri Aug 1, 2008

going on between our agent and our mortgage broker. Basically he was so invested in having her do the mortgage (we discovered they are in a romantic relationship) that we feel he didn't do due diligence for us with respect to advising my husband and I as first time home buyers. All that aside, we cancelled within the contractually agreed time to cancel the escrow and signed the papers. The seller is refusing to sign; I imagine she is understandably upset, but we cannot buy a house just to make someone feel better. The house is currently marketed as for sale. Is this legal, given that she is still technically in escrow with us?

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Laurie Manny, , Long Beach, CA
Sat Aug 2, 2008
Hi Megan,

First of all you should speak with your Realtors Broker as soon as possible.

The home can be offered for sale "subject to cancellation of existing escrow".

Having canceled prior to contingency removal places you in an excellent position. If the seller wants to sell the home she will have to sign the cancellation of escrow eventually, she cannot open a new escrow with the current contract and escrow still in play. She can, however, make this a pain in the neck and draw it out.

Just as an FYI, the party who files for arbitration or mediation must pay a substantial fee to get it started. If what you say is accurate the seller has no case whatsoever; it would be a waste of her time, money and energy to file against you, I don't see how she could win. It will likely not be necessary for you to file against her either as sellers who want to sell come to understand that they must sign to move on. Her agent and the escrow officer need to reacquaint her with the terms of the contract and advise her that she in in violation of the contract and could be subject to a fine for the delay in releasing you from the contract.

It has been my experience, that with the right amount of pressure the seller will sign the cancellation. Call the broker and call escrow, have them put the heat on her, call everybody daily until you receive your check.

If you decide to pursue the purchase of the home through another agent, be certain to obtain a release from your current agents broker so that a procuring cause situation does not occur. Procuring cause relates to the commissions paid to the agent. The agent who first showed you the home and wrote the contract will be due the commission regardless of who closes the deal should YOU purchase the home and they decide to pursue it.

Perhaps the agents broker can find you another agent in the same office to complete the transaction and an equitable arrangement can be made to compensate the first agent with a referral fee of some sort.

While these situations can be a little messy they usually iron themselves out in short order. The contract is explicit on how it is to be resolved.

Best of luck to you,
Laurie Manny
Prudential California Realty
(562) 212-5420
1 vote
Monique and…, Agent, Beverly Hills, CA
Fri Aug 1, 2008
Hello Megan,

I difer with Eric. If they are refusing to cancel the escrow with you and have the house listed for sale they can open another escrow just not with the same escrow company. If you choose to purchase the house with another agent you could end up in courty/mediation or arbitration as the last agent may have right to precurring cause unless you can prove what your thoughts were with regards to the lender and realtor.
Discuss with your agents as to why they haven't cancelled escrow and be certain you were within your contingency period.


Monique Carrabba
The Reavis Group
Keller Williams
1 vote
Dana Tippit, Agent, Chesterfield, MO
Fri Aug 1, 2008
The house is not sold, and if you did not close on your offer it is no longer under contract...So yes technically the sellers can market the property for sale.

Dana Tippit
RE/MAX Midwest Group
St. Louis, MO. 63141
1 vote
Charita King…, , Downey, CA
Thu Aug 21, 2008
I'm a bit confused about why you call the transaction "shady" if two people are having a romantic relationship. Would that change if they are husband and wife?

Charita King 562-276-8681
0 votes
Keith Sorem, Agent, Glendale, CA
Fri Aug 1, 2008
This is a great question.
So far as cancelling your escrow, please consult with your REaltor's broker if you are unable to set the seller to sign. I would imagine your Realtor, is they are having a problem, have already spoken with their broker. Sometimes one broker can contact the other Realtor's broker to work out any mi-understandings.

So far as the status goes, when a property is in escrow, but the contingencies have not been removed, it is still technically active. In most MLS systems the status is "back up offers", meaning that because the buyers have not released all contingencies, the agent is looking for other buyers who would be willing to be in "back up" position. Once your escrow is cancelled then they open their escrow.
0 votes
Dyanna, , California
Fri Aug 1, 2008
Two escrows can not LEGALLY be opened at the same time on the same property, even if it is with 2 different escrows. The property can be put up on the market, but the owners can not accept an offer and open escrow, it is ILLEGAL!! If the sellers are not open to signing the cancellation you need to call their agent and his broker and file a complaint. You mentioned that you cancelled within the contingency period, so you have all the right to request your deposit back. You can also call escrow and ask them what you need to do in this case. You might have to go to mediation on this if the sellers continue to be unresponsive. Now if you really like the property and WANT the property, find yourself another agent. Don't let this opportunity pass you by due to one bad agent. Try out another agent and get in to your home. You liked the house enough to submit an offer; do you really want to give it up?

Good Luck
0 votes
Eric H. Wong , Agent, Albany, CA
Fri Aug 1, 2008
The Seller must resolve the disagreement with you, and release you from the escrow that you have with her, before she can open another escrow with a new buyer. The seller cannot have 2 open escrows on the same property.
I actually have a question for you. Are you still interested in the home? If so, maybe it would be best for everyone if you found a new agent you trusted, and a new loan officer, and try and get back into contract on the house. If you are still interested in it, this may be a way to make everyone happy.
Also, did you complain to the broker/manager of the lender and the Realtor you have had such a bad experience with, or even to the DRE?
I think you may have more options than you realize.
0 votes
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