Posted by Max-Va on March 20, 2007 at 06:38:33:
I am not an attorney, but I have been to court.
I do not believe a state law governs the terms. It is the contract that determines the proceedure here. It should be addressed or you might have a bad contract.
Seek qualified legal advise.
PS: Don’t take advise from an investor that has not had his morning coffee, yet.
Earnest Money Return - Posted by PR
Posted by PR on March 19, 2007 at 23:44:43:
We put down earnest money in the amount of $4,000 on a kennel in Georgia. Sell price was $1,450,000. The contract stated a. $4000 earnest money deposit is required to be paid upon execution of this agreement. b. Proceeds of a new loan for the business portion of said purchase in the amount of one million two hundred thirty two thousand
five hundred on terms agreeable to the buyer, funds to be obtained from a lender of her choice. Buyer shall furnish seller a letter of committment with regard to financing on or before 1-15-07. Financing could not be obtained. Kennel income did not support purchase price.
Sellers are disputing return of my money, saying I defaulted and broke the contract. Since financing could not be obtained, and the letter produced, are they entitled to our money? Since financing could not be obtained, shouldn’t paragraph b make the contract null and void? They have refused to release my money and in fact are demanding the return of it to them. Is there a law that returns the earnest money if no financing can be obtained even if the contract doesn’t specify it is to be returned. It doesn’t say we forfeit it either.
Re: Earnest Money Return - Posted by Natalie-VA
Posted by Natalie-VA on March 20, 2007 at 16:30:55:
I’m not an attorney either. It seems that the first problem is that your contract doesn’t address the disposition of earnest money. If it’s held in a real estate broker’s escrow account or attorney’s escrow account, state law may provide some remedy.
The other issue I see is the sentence that says, “Buyer shall furnish seller a letter of committment with regard to financing on or before 1-15-07.” Statements like that should always be followed by what will happen if that doesn’t take place. Apparently your contract doesn’t say what happens if you don’t supply the letter.
The bottom line is that $4000 can be eaten up by attorney fees pretty quickly. I would research state law on earnest money held in escrow accounts. If the answer isn’t clear, I would negotiate some sort of settlement with the sellers to keep it out of court.
–Natalie
Re: Earnest Money Return - Posted by DJ-nyc
Posted by DJ-nyc on March 20, 2007 at 14:14:38:
Contract law. Ask your attorney about the mortgage contingency in your contract. Hopefully there was one.