Posted by Natalie-VA on May 03, 2005 at 09:52:37:
I feel your pain. No financing contingency? Hmmmm…what does the contract say about returning earnest money then? How much is the earnest money?
Anyway, I would have the attorney review it. My hope is that your seller can close with buyer #2 without releasing the money to buyer #1. Even if the money just sits in escrow, it might make your seller feel better.
Buyer’s agent from hell!! - Posted by Dorinda
Posted by Dorinda on May 02, 2005 at 22:18:41:
I’m a realtor representing seller. We were in escrow, buyer never removed contingencies even after seller submitted NBP 2x; seller even gave an extension to get loan approval. However, day after close of escrow was to occur, buyer’s agent cancels contract because buyer could not get loan. Property was off market for 7wks and seller wants all or at least a portion of deposit. Buyer’s agent is advising buyer not to sign cancellation contract. Seller wants buyer to pay cancellation fee, escrow fees and wants the difference. There’s a ready, willing and approved buyer waiting to open escrow. But if buyer #1 does not sign cancellation papers, we won’t be able to close the deal with buyer #2. What should I do?
Re: Buyer’s agent from hell!! - Posted by Natalie-VA
Posted by Natalie-VA on May 03, 2005 at 08:46:21:
Hi Dorinda,
I am a RE Broker, not an attorney. I HATE when people write contracts and don’t have their financing in order! Anyway, I think a lot of your answers depend on your contract. Some points to consider:
If there was a financing contingency in the contract, the buyer is usually entitled to the return of their earnest money.
If there were other contingencies in the contract, they are usually automatically removed if the buyer doesn’t remove them within a certain timeframe.
The contract should state what process is required if the buyer is denied financing. For example, our contract requires that the listing agent/seller be notified in writing in x amount of days of loan denial or buyer is in breach of contract. Did the buyer’s agent give you the proper notification in the proper timeframe?
If buyer #1 sent you a termination letter you should be able to sell to buyer #2. It’s a common misconception that the earnest money release needs to be signed before moving on. The dispute here seems to be over earnest money. If buyer #1 can’t close and you have it in writing, sell to buyer #2. Your seller’s attorney should review this advice before implementing it.
Lastly, as much as it hurts, the best advice you could give your seller would be to move on and get it sold to the next buyer. Getting caught up in earnest money disputes usually doesn’t do anyone any good. I once had an earnest money dispute where the buyer had clearly defaulted on the agreement various times. The judge decided that since the buyer was not a ready, willing and able buyer, they should get their money back. He ruled in direct contradiction to the terms of the contract. The lesson here is, even if you’re right, it may not be worth it to pursue.
Your last question, “What should I do?” You should consult with your broker and your seller’s attorney.
Good luck with it.
Re: Buyer’s agent from hell!! - Posted by Dorinda
Posted by Dorinda on May 03, 2005 at 09:38:38:
Thank you Natalie for your comments. Sounds like our contracts are different. But in response to #1: there was no financing conting.; #2: I’ll look into this; #3: Diff. in CA contract but notification was made the day after COE; #4: I’ll get advice; #5: You’re right and I did suggest to seller to just move on. Even though he could use some if not all of the deposit money because property has been off mkt, tenants have moved out so he’s paying 2 mortgages (incl. his own home) and he doesn’t have a job, he’s more upset with the principal of the matter. He feels buyer should at least pay for cancellation fee and buyer’s agent is advising buyer not to sign so buyer could get all monies back. He doesn’t want buyer’s agent to get away with this again with someone else. This buyer’s agent really has horrible business practices. In future, as a listing agent I will always put in a passive contingency removal clause that won’t need verbal or written agreement and if buyer should default or cancel after that period, seller automatically receives the deposit. After having bad experiences, you change your way of doing things.