Appeals Court Rules on Earnest Money Dispute - Posted by John J

Real Estate Investing Real Estate Financing
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Posted by Jim FL on August 03, 2002 at 02:32:47:

John J.,
I’m a little tired, so I’ll only mention a couple of things that jumpo right out at me from this post.

First, the reporter says:
“Utah home sellers must return any earnest money deposits before filing suit against buyers who attempt to back out of purchases, the Utah Court of Appeals ruled Thursday.”

Then the article goes on to say the court says:
"Our conclusion is congruent with the purchase contract’s default provision, stating that a ‘seller may elect either to retain the earnest money deposit as liquidated damages, or to return it and sue the buyer,’ " wrote Judge Pamela T. Greenwood for the court. “Only if the seller first returns the earnest money deposit may he or she then sue the buyer.”

Now what this tells me is that the court said, "Yes Mr./Mrs. Seller YOU MUST abide by the written contract you signed with this buyer. In that agreement it said that you were to either keep the earnest money as liquidated damages should the buyer not go thru with the sale, or, if you choose to sue the buyer forcing them to close, then you must first return the earnest money they paid.

Not as the reporter seems to indicate with their opening statement, that ALL earnest money, in EVERY RE agreement MUST be returned IF the seller wishes to sue the buyer in that agreement.

Once again, a reporter seems to get it wrong.
Gee, I wonder why the public is so far off some times when it comes to understanding things.
But, if the paper says something, then it must be true and accurate, right?
NOT!!

Can you tell I have no lost love for reporters?

Anyway, that was the first thing to hit me.

Later with more rest I’ll come back and re-read it for more.

Not a big deal as far as I’m concerned.
Just make sure you have good contracts, and follow them to the letter is all this should teach you.

Take care,
Jim FL

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Appeals Court Rules on Earnest Money Dispute - Posted by John J

Posted by John J on August 02, 2002 at 22:31:00:

Over the years I have seen numerous questions posted here about Earnest Money and failed transactions. The following is the first part of an article in our local paper today, that might provide some clarification:

Utah home sellers must return any earnest money deposits before filing suit against buyers who attempt to back out of purchases, the Utah Court of Appeals ruled Thursday.
The decision stems from a 1999 contract for the sale of Daniel and Lisa McKeon’s Orem home to Kenneth and Amy Crump.
The Crumps paid the McKeons $2,500 as an earnest money deposit, but were not obligated to purchase the home if it was appraised for less than the agreed purchase price, Thursday’s opinion said.
On Dec. 3, 1999, the Crumps gave notice they were rejecting the appraisal – which put the home’s value above the agreed-upon purchase price – because they believed it was flawed.
The notice came one day after the contract time limit had expired for them to contest the appraisal, and the McKeons filed suit in 4th District Court seeking to enforce the sale. The Crumps then said they would not go through with the deal and demanded the return of their earnest money.
The McKeons returned the earnest money to the Crumps after initially requesting that the money be deposited with the court.
The couple did not let a second appraiser inside their home, and a second appraisal was ultimately lower than the purchase price.
Fourth District Judge Fred D. Howard then dismissed the McKeons’ lawsuit, determining the couple should have returned the earnest money deposit prior to filing the suit. The appeals court affirmed Howard’s ruling.
"Our conclusion is congruent with the purchase contract’s default provision, stating that a ‘seller may elect either to retain the earnest money deposit as liquidated damages, or to return it and sue the buyer,’ " wrote Judge Pamela T. Greenwood for the court. “Only if the seller first returns the earnest money deposit may he or she then sue the buyer.”
http://www.sltrib.com/08022002/business/758403.htm