Posted by John Merchant on July 01, 2005 at 13:30:10:
Frank your story reflects the real world of lawsuits and why/why not.
Legal costs are expensive and it’s normally far better to try to work out a compromise where both sides get something but avoid the lawsuit and lawyers.
ernest money - Posted by juliet wilson
Posted by juliet wilson on June 27, 2005 at 23:57:27:
My friend got laid off after putting down ernest money on a property. As a result the lender that had approved him withdrew the offer . Now he is not able to get his ernest money back, the realtor wants to give him credit when he finds him another lender. What recourse is there in a situation like this. He thinks he should get his money back because he was not approved as opposed to if he had changed his mind. It has been over 2 months and no lender has been found.
Re: ernest money - Posted by Frank Chin
Posted by Frank Chin on June 29, 2005 at 09:23:14:
Juliet:
I was on the other side of the table when something like this happened.
Got a house under contract, and sold it under the assignment. I received a 10% down deposit from my “buyer”, with the P&S contract and with the normal mortgage contingency clause.
My buyer got his “mortgage approval”, and we got a copy of it. So as far as we were concerned, the closing was a GO, and the contingency satisfied.
Lo and behold, the buyer lost his job, a week before closing, called the mortgage company, and told us through his attorney that he wanted his deposit back. We said NO.
He threatened to sue. Now, I have my attorney, the sellers attorney, and the buyer’s attorney doing the threatening looking into the mess.
Long and short of it, the amount was $12,700. My attorney said go ahead and sue as legal costs itself would in his estimation run several thousand dollars for the buyer. Or he can try small claims and go for $3,000 at the time. Either way, he wasn’t getting $12,700 if we hang tough.
And I as the “flipper” would have to close on it, and spend around $7,000 in closing costs. Who’ going to pay for this?? The seller was NOT willing to extend the contract.
Finally, we settled, and the buyer got several thousand back, 3 or 4 as I recall, and I closed on the place with over 8 grand of the buyers funds. I was happy as I closed on it, with closing costs paid by the buyer.
I asked my attorney what the “buyer” can do if we ignored him and reuse to give the money back. He said if he was the buyer’s attorney, he would do a filing to cloud the title, and then file suit to block any sale of the property.
His question to me was “do you want to wrap this up quick, start making a few bucks, or be bone headed and go to court”. He further added “its tough whcih way a judge may decide”.
From what I was told, the buyer was told he doesn’t have much of a case (via his attorney) and getting a few dollars back, while out of work, is better than arguing out the case in court. In short, he should spend time looking for work.
Frank Chin
Always the 1st step - Posted by John Merchant
Posted by John Merchant on June 28, 2005 at 10:06:05:
First, on ANY contract, it must be carefully read by him & his lawyer to see exactly what he did sign.
Then, if he’s in the right and is immediately entitled to his money back, he needs to present his written demand for same, by certified mail, with receipt, copying the RE Broker…and notifying that Broker that if the funds aren’t returned within the next day or so that he’ll be going to that state’s RE Commissioner with a complaint.
Re: ernest money - Posted by River City
Posted by River City on June 28, 2005 at 08:13:49:
Was his contract contingent upon obtaining financing? If so, he should receive a refund of his earnest money. Did he receive a letter of denial from the lender? This is a requirement of ECOA. He can give the realtor a copy and the realtor should refund the earnest money. If the loan applied for was an FHA or a VA, he is required to refund the earnest money deposit. He should demand the refund IN WRITING, NO PHONE CALLS. And, he should copy the demand to the Board of Realtors.
Re: ernest money - Posted by Hope Andrews
Posted by Hope Andrews on August 30, 2005 at 17:25:44:
We on the other hand have a situation where the buyer was turned down after they lied on the contract. Know they refuse to give us the ernest money they put down for us to hold the house for them. Do we have legel rights to that money after waiting 3 months for the deal to go thru?