Home Selling in 97123>Question Details

Bennett, Other/Just Looking in Hillsboro, OR

Where do I go to get the Oregon rules covering ' the forefeiture of earnest money ' when the buyer didnt buy?

Asked by Bennett, Hillsboro, OR Fri Aug 8, 2008

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This is a specific contractual question. You can write 10 contracts and never have the same answer to this. And to answer it you need to know why they backed out. They may well have had a contingency. Did you have an agent? We as brokers have a responsibility to answer these questions and more and we have E and O to protect you. Need a little more info and we can help!

Thanks Bennett!

Dirk
0 votes Thank Flag Link Sat Mar 29, 2014
Buyer signs agreement, seller signs agreement, buyer changes their mind, does seller keep earnest money? house off market for 6 days.
0 votes Thank Flag Link Wed Mar 26, 2014
Answer ~ You can find the earnest money, arbitration, and litigation clauses in the OR Earnest Money Agreement, that you signed for the sale of the property.

Note ~ This is an interesting question, it's not as clear as you might think. It largely depends on why the buyer didn't buy and where they were at on the due diligence. If they are within the home inspection period there's not a whole lot that you can do to get the earnest money. If you feel that they have not been honest with you, simply request in writing that they give you the home inspection report, if they do not get you the report by midnight of the last day, they you actually under Oregon law have right to the earnest money. Even still you may and in all likely hood will have to take it to small claims court.
When you are accepting the sales agreement be weary of Promissory notes insist on checks or cash being deposited into escrow. This is a way to stop buyers from submitting multiple offers of other homes, also you know that they are more serious if they're committing funds. A good time line for earnest money is within 72 hours of mutual acceptance. Be weary of people want to commit after the inspection period, as this may be another way to avoid putting money down, so they can submit multiple offers.
Buyers don't need more then a few days to have an inspection done, so 5-7 business days should be more then adequate (you don't need to give them the full 10 days if they're serious.)

Jason H. Gomes
Prudential NW Properties
Greater Portland Area
Cell: 503.608.8785
Desk: 503.350.7378
0 votes Thank Flag Link Fri Jun 5, 2009
As folks read this question and the answers given, another question may have come to mind. Why would the money be refunded if both parties were not in agreement that it should be released? Keep in mind, theTitle Company who holds the earnest money check in escrow can not release the funds unless both parties sign for the release. These questions should be asked prior to that money being released if there are extenuating circumstances not clearly defined in the E.M. agreement. If there is a dispute related to your Earnest Money Agreement there is a mediation/arbitration procedure written into the contract to help solve this dispute.
Web Reference: http://www.junelizotte.com
0 votes Thank Flag Link Sat Sep 27, 2008
Your first stop is the Oregon Real Estate Agency at http://www.oregon.gov/REA/index.shtml. This is the home page and has links to applicable statutes. Earnest money issues are always difficult and seldom clear-cut, despite what claimants on either side think. The earnest money agreement should cover everything, but if the language elsewhere in the agreement is unclear, there might be a problem. The forms Realtors use call for arbitration or mediation of a claim and they can get resolved fairly quickly.

Here's an example of unclear language: "Seller to repair furnace prior to close." Well, what if the seller fixes it himself, does a bad job, the house won't pass FHA underwriting and the deal fails? In this instance, the seller can insist he's completed his obligation and should get the earnest money. The buyer may not agree.

Escrow companies will hold on to the earnest money until both sides agree in writing on what to do. This sounds great, but in For Sale By Owner disputes, one or both sides sometimes doesn't fully understand the obligations and won't sign the release. I've seen situations where one side will refuse to sign just out of cussedness.
0 votes Thank Flag Link Thu Aug 21, 2008
Jean is correct that it should be stated very clearly on the EM agreement. Now there are many reasons why a buyer can get out of the deal without forfeiting there EM and not all of them will a seller agree with. There is also an area of the contract that calls out how to deal with the dispute should the seller and the buyer disagree.
Web Reference: http://www.HankPaterson.com
0 votes Thank Flag Link Fri Aug 8, 2008
It states it very clearly in the Oregon Realtor Earnest Money agreement how the earnest money is to be treated, depending on the reason the buyer did not/could not complete the purchase. If you want the actual verbage I can send you a copy of the Earnest Money agreement Realtors use. If you use a different form (Steven & Ness) I have no idea how the forefeiture of Earnest Money is addressed.
0 votes Thank Flag Link Fri Aug 8, 2008
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