Buyer entered into contract under false pretenses.They broke contract via their lawyer. I want the earnest money and my realtor says no. I live in IL.

Asked by Sad Seller, Aurora, IL Fri Dec 23, 2011

The buyer said that they did not have a home to sell and they had a pre approval letter from their mortgage lender. Contract sent to attorney for approval. Their attorney comes back and says that they need more time to sell their home and that they can't get financing until they sell their home. I want the earnest money back, but my realtor says no and my attorney said that I can't in IL unless there is a court order. I have the proof stating that they said they didn't have a home to sell, along with the fact that they crossed it off of the contract and I have a copy of their preapproval letter for financing. I feel the deal was entered into under false pretenses and that I should be able to keep the $2,000 earnest money. Comments?

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11
Anthony Cava…, Agent, Jolier, IL
Sat Dec 24, 2011
Like others have said, it sounds like it was during the attorney review period. If it was during that period, the attorney doesn't even need to give a reason; they can simply declare the contract void.

Both parties still need to agree in writing to release the earnest money. If the parties don't agree on where it should go, the broker holding the money should file an interpleader to have the courts settle it. But if your attorney thinks you have no right to keep it, I would go with that and just release the earnest money, don't waste your time, and move on.
1 vote
Bill Eckler, Agent, Venice, FL
Sat Dec 24, 2011
Sad,

This is a most unfortunate situation........It would appear that the advice of your attorney would be your most reliable information.

A letter of pre-approval is not "approval." It simply means that a letter of application consisting of necessary paperwork has been submitted and is under consideration. Many people misunderstand this as "approval" when indeed it's only the first step in the process.

Without knowing the specific circumstances involving their home, it's impossible to speculate why they went from not needing to sell a home to needing to. Many people are often caught assuming things and finding later that things are not as they thought.

If you are no longer interested in this transaction, as your attorney has advised, you have an "out" by persuing a court order....which I'm sure could be costly.

Good luck,

Bill
1 vote
Don Tepper, Agent, Burke, VA
Sat Dec 24, 2011
Unfortunately, your attorney almost certainly is correct. But I understand your feelings--you've clearly been deceived by the buyers and perhaps by their agent. I'd suggest that you at least consider Ignacio's advice.

Further, ask your lawyer and your agent point-black: "What steps do I take to make sure this doesn't happen again?" Make it crystal clear to them that you're not happy with the process and that you don't expect it to happen again. I understand that during attorney review, the deal can be killed for any reason. Yes, but it's not right that the reason is because the buyers deliberately lied and because the buyer's agent may have been a party to the deception.

Hope that helps.
0 votes
Marie Souza…, Agent, Centerville, MA
Sat Dec 24, 2011
Take Bills advice below. It's not worth pursuing for a small amount of money here. Yes, it's frustrating & yes, maybe they we not 100% upfront, but MANY buyers make offers that do not have contingencies that SELLERS see (mortgage, home sale etc), even though they MUST get a mortgage or sell their current home to purchase another. Just because it is not a contingency for you to see, doesn't mean it's not something they have to do in order to move forward. Would it have been nice to know, absolutely. It is rare that this wouldn't be disclosed, as all involved in a real estate transaction SHOULD be acting in good faith. That being said, it does happen, as you are aware. Lesson learned, move on & make sure to ask more questions about the next buyer, who could be right around the corner here. Another option, extend the agreement, put a 48 hour kick out clause in it in case you get another offer. It may be easier to sell to these buyers than it start all over again. Just a thought.
Best of luck -
The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services
Phone: 508-790-2000
info@mariesouzateam.com
http://www.MarieSouzaTeam.com
0 votes
Scott Godzyk, Agent, Manchester, NH
Sat Dec 24, 2011
False pretences is not a reason unfortanately to keep a deposit, if the sale is contongent upon them getting a mortgage and they did not get it within the tome on their contract, they should get their deposit back. What the buyer did is very common, the key is if your agent asked teh buyers agent and teh buyers agent lied, then there may be recourse againsty that lie, but you have to abide by the contract you signed. For legal advice you should meet with a lawyer, good luck working things out
Web Reference:  http://www.ScottSellsNH.com
0 votes
Gary Geer, Agent, Antioch, IL
Sat Dec 24, 2011
Sad Seller,
You state the contract was sent to the attorneys for approval. Attorneys (yours and or the buyers) can disapprove the contract during this time. Sometimes they don't give all the details of why they don't approve the contact but in this case they did. In Illinois all parties (buyers and sellers) must approve the release of any earnest money. Discuss this with your agent and talk to your attorney to get legal advice as to what you should do.

All the best,
Gary Geer

http://www.GaryGeer.com
0 votes
Annette Law…, Agent, Palm Harbor, FL
Sat Dec 24, 2011
Dear Sad,
Cheer up, Christmas is coming and you can take a break from showing your home and enjoy the season and in your case, maybe even some snow.

As you are aware there are many safegards in place to protect a buyer at nearly every step in the home purchase process. A buyer has many, many, many ways to exit a purchase agreement. Until you are certain each and every one of those many, many, many ways have been exhausted, you will find yourself fighting for a losing cause. Unfortuneately, the same can not be said regarding the safegards in place for the home seller.

Among the many important tasks of a real estate pro is to keep all parties on board with a transaction with everyone seeking the best possible outcome. Circumstantces beyond the control of the profesionals often materialize in the regular course of events that change what is possible. Pursing the earnest money in disregard to your own legal consul seems like an exercise in futility.

To flle complaints against everyone involved, and other such toxic action will not be to your benefit in the long run. Everyone involved is disappointed with this outcome. To continue flailing about trying to find some gratification in creating misery for others carries a high emotional cost. Sometimes the very best action is to put it down and move on.

Best of success to you in selling your home.

There's a buyer right now looking for a home like yours. Get this behind you and prepare to negotiate a great deal for you and the new homeowner.

Best of success to you.
Annette Lawrence
Broker/associate
ReMax Realtec Group
727. 420. 4041
Web Reference:  http://www.MyDunedin.com
0 votes
Mikel DeFran…, Agent, Canton, MA
Sat Dec 24, 2011
Sad.... the fact that you indicate your own attorney is advising you against it does not bode well for your rationale. Discuss with your attorney further but don't get too hung up on $2,000 ( keep in mind as you dispute the contract it may interfere with your efforts or ability to sell to another buyer ). Good Luck!
0 votes
Mike Cluck, Agent, Geneva, IL
Sat Dec 24, 2011
If the facts are as you stated then you have a legal issue that needs to be resolved with your attorney and the buyers attorney, this is not a real estate issue and as a Realtor we are prevented from practiving law or giving advice on these matters. Your Realtor is wrong is advising you that you cannot keep the earnest money, you need to rely on your attorney and their advice.
0 votes
Joseph Finne…, Agent, Bethlehem, PA
Sat Dec 24, 2011
You said that the contract was sent to the attorney for APPROVAL. To me, that implies that the contract was contingent upon an attorney review. If that is the case, the attorney made you aware of the problem and didn't approve the contract. Therefore, even though you feel justified in keeping the earnest money, legally you may not have any justification in doing so. Did you have a fully approved and executed contract?

It may be one of those cases where you found out now so you should return the earnest money versus you found out a week before you were supposed to settle (that would be a much worse situation). It depends on what contingencies/terms were in the initial purchase agreement.

Every situation is unique but if the earnest money was deposited and put in escrow (held at the bank) then it can only be released (at least in PA) if the buyer and seller agree in writing to a disbursement or a court order is issued. In the meantime, depending on the laws in your state, any legal recourse could possibly hold up putting your home back on the market.

Unfortunately, your best bet may be to cut your losses and move on. You should definitely seek legal advice.

Regards,

Joe Finnerty
Prudential Patt White Real Estate
Lehigh Valley, PA
0 votes
Ignacio, Rea…, , 89128
Fri Dec 23, 2011
Document EVERTHING and File a complaint with the REAL ESTATE Division in you area agaist the agent.
0 votes
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