Real Estate Agents - Earnest Money hold up

Author

Earnest Money hold up

Sharon

2005-12-11, 11:21 am

Hi, I am a realtor in IN. I am going thru a situation with another
real estate Co. I wrote and offer and presented a check. The deal
fell thru becuse my clients could not come up with the entire $$
downpayment. They (unknown to them) had a brick put on their IRS
check. An ex-wife of the husband used his SS# for $100,000 of income
the previous year. The other realtor will not release the EMD. He
claims that the sellers suffered a loss due to the delays in this sale,
and the ultimate cancellation. This loss was for heating gas. If the
gas had been purchased earlier in the year it would have been a lot
cheaper then waiting until fall/winter when the pricese are at their
peak. Both our offices are members of NAR and use the appropriate
forms. I was always under the assumption that if the buyers could not
obtain financing due to something like this that they had no knowledge
of, they would be able to back out. IMO the gas should/coluld have
been purchased earlier and transfered and sold to the buyer. I've hit
a stone wall with this realtor. Any suggestions?

lobo

2005-12-11, 1:21 pm

"Sharon" <shar210@yahoo.com> wrote in message
news:1134314123.279927.161400@f14g2000cwb.googlegroups.com...
> Hi, I am a realtor in IN. I am going thru a situation with another
> real estate Co. I wrote and offer and presented a check. The deal
> fell thru becuse my clients could not come up with the entire $$
> downpayment. They (unknown to them) had a brick put on their IRS
> check. An ex-wife of the husband used his SS# for $100,000 of income
> the previous year. The other realtor will not release the EMD. He
> claims that the sellers suffered a loss due to the delays in this sale,
> and the ultimate cancellation. This loss was for heating gas. If the
> gas had been purchased earlier in the year it would have been a lot
> cheaper then waiting until fall/winter when the pricese are at their
> peak. Both our offices are members of NAR and use the appropriate
> forms. I was always under the assumption that if the buyers could not
> obtain financing due to something like this that they had no knowledge
> of, they would be able to back out. IMO the gas should/coluld have
> been purchased earlier and transfered and sold to the buyer. I've hit
> a stone wall with this realtor. Any suggestions?

If your state uses a third party financing addendum and was attached to the
original offer, that could help your case. Not enough money for the down
payment = no financing, thus no loan. Have the lender write them a loan
denial letter. Attach that to the release of earnest money and send it to
them.
This may give your clients an out.
Good luck!

Steve Foley

2005-12-13, 2:21 pm

I don't know if things are the same in IN, but in MA, the listing agent
would be holding the money. They cannot legally release it without concent
from both parties.

It sounds as if the sellers are holding out.

I had a similar situation, where the buyer's financing fell apart and the
sellers decided not to release the deposit. I let the listing agent know
that my buyers were looking for an attorney, and expected to collect triple
damages and legal fees, as the sellers had no legal reason to refuse to
release the funds.

"Sharon" <shar210@yahoo.com> wrote in message
news:1134314123.279927.161400@f14g2000cwb.googlegroups.com...
> Hi, I am a realtor in IN. I am going thru a situation with another
> real estate Co. I wrote and offer and presented a check. The deal
> fell thru becuse my clients could not come up with the entire $$
> downpayment. They (unknown to them) had a brick put on their IRS
> check. An ex-wife of the husband used his SS# for $100,000 of income
> the previous year. The other realtor will not release the EMD. He
> claims that the sellers suffered a loss due to the delays in this sale,
> and the ultimate cancellation. This loss was for heating gas. If the
> gas had been purchased earlier in the year it would have been a lot
> cheaper then waiting until fall/winter when the pricese are at their
> peak. Both our offices are members of NAR and use the appropriate
> forms. I was always under the assumption that if the buyers could not
> obtain financing due to something like this that they had no knowledge
> of, they would be able to back out. IMO the gas should/coluld have
> been purchased earlier and transfered and sold to the buyer. I've hit
> a stone wall with this realtor. Any suggestions?
>

darrenli516@yahoo.com

2005-12-16, 12:21 am

This sounds like a real mess!
But, I don't understand what the downpayment had to do with obtaining
financing. The offer should never have gottern that far without the
buyers verifying that they had sufficient funds for the downpayment.
I guess IN is one of those states that doesn't use attorneys for Real
Estate sales? Maybe now you can see why many states do.

Darren
darrenli516@yahoo.com

Robert Hallsey

2005-12-18, 12:21 pm

darrenli516@yahoo.com wrote:

>This sounds like a real mess!
>But, I don't understand what the downpayment had to do with obtaining
>financing. The offer should never have gottern that far without the
>buyers verifying that they had sufficient funds for the downpayment.
>I guess IN is one of those states that doesn't use attorneys for Real
>Estate sales? Maybe now you can see why many states do.

It's more a matter of safeguards than attorneys. California doesn't use
attorneys and a mess like this is rare.

For starters, agents don't hold money. It's illegal. They may not perform
the escrow function. Their brokers can, but usually don't. Title companies
do that out here.

The way it works is that the selling agent submits the offer to the listing
agent with a photocopy of the client's earnest money check. If the seller
accepts the offer, the listing agent opens escrow with the title company.
Now, with a ratified contract in place, the buyer gives the actual check to
the title company.

As far as deals falling through, all the continengcies are in the
pre-printed contracts. It's just a matter of checking them, and of course,
there are a ton of disclosures to the buyer advising against non-contingent
offers.

So if a buyer can't remove the financing contingency, the listing agent
gets his client to sign off on the escrow cancellation, and everything goes
back the way it was. The seller can be difficult, but any good listing
agent would advise his client to let it go. Why tie the property up in
litigation with a buyer who obviously can't buy it? Who wants a lis pendens
on his property? It's better to go look for another buyer.

In fact, we involve lawyers as little as possible, and they seem fine with
that. When residential real estate deals go sour, it's usually 90% ego and
10% money. Lawyers would rather just say no.

Steve Foley

2005-12-18, 4:21 pm

My mistake. I meant listing agency, not agent.

In my market, the listing agency (broker) usually does hold the escrow.

"Robert Hallsey" <hallsey@kw.but.address.is.invalid> wrote in message
news:j6vaq1he799kuaeipso6j52jcro09tsdva@news.supernews.com...
> darrenli516@yahoo.com wrote:
> For starters, agents don't hold money. It's illegal. They may not perform
> the escrow function. Their brokers can, but usually don't.

darrenli516@yahoo.com

2005-12-20, 11:21 am

Reading all this makes me very glad that we Realtors in my area insist
that attorneys are involved in all our sales. A contract of sale is a
legally binding document, and thus Realtors not allowed to dispense
legal advice about the contract.
Oh sure, Realtors can get a pre-printed contract signed, but it is the
changes, contigencies, and subsequent problems that require an
attorney's attention.

Darren
darrenli516@yahoo.com

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