Seller refuses to return earnest money to us - Please HELP!

[DiSnEyFrEaK22]

Hi everyone! My fiance and I are in a really tough situation right now. We made an offer on a home and the seller accepted. The seller's agent did notify us that he showed the house over the weekend and there were no bites on it. The seller's agent proceeded to tell our agent that he didn’t think his buyers were serious about purchasing the home. Of course we were serious we put an offer on the house! We put down a $2,500 earnest money deposit (our agent's idea to show the seller we were serious). Which later I find out is wayy to much, it's typically $1,000. So the check was cashed within 36 hours. Then, the seller comes back and raises the price of the home and claims she didn't calculate transfer taxes correctly and she need to pay off the second mortgage on her home and she had tons of debt to pay off. This should have been a red flag to us, but I loved the house and the area and it was close to my family. So we decided to purchase the home at the higher amount. In our contract it stated we needed to have an inspection within 5 days, so we signed on the 14th, and had it inspected within the allotted time. The inspection went terribly wrong, they found tons of things wrong that we had no idea about We were very upset. Our agent referred us to the attorney he normally uses for real estate transactions. The problem is our agent supplied our attorney with the inspection report late and therefore when she drafted up the letter requesting that repairs be made it was 1 day late per our contract. The seller declined. Then, we requested that the seller make some of the repairs, the seller again declined. And then we gave it another try and requested that the seller take off money on the purchase price, which the seller also declined. At this time we were completely finished with this deal. The seller and her agent left a terrible taste in our mouth. We were really upset by the way everything was handled and midway through this deal our attorney called and said, I'm going to finish this deal with you but I've decided to change careers, I will be handling bankruptcies only, real estate is too demanding. Fine with us at the time, but she has completely not responded to us for over a month and a half. We have sent her certified letters asking her what she is going to do to get our money back from the seller and no response. Prior to our attorney cutting us off completely she did request that the seller return the earnest money check to us and they declined because they stated that our attorney review period was not met, b/c our attorney notified the seller's attorney on the 6th day not the 5th. Luckily, we didn't pay our attorney for the work that she "failed" to do.

We did get a new attorney and we are scheduled to close on a new house this Tuesday , but still no one can afford to lose $2,500. I'm not sure what to do. I don’t think it’s fair because I believe that my fiancé and I were more than accommodating to the seller’s demand. Why won’t she release the money back to us? Why should I have to go to court and lose money. I'm the innocent first time homebuyer! Just a side note, the home has been on the market for 92 days now. Hopefully no one has to deal with that crazy seller!

Anyone have any suggestions?

 

[Lisa loves Pooh]

The two times we have purchased, the home owner didn't get our earnest money. It was held. Actually he first time they didn't even cash the check and this time I think it went towards escrow or something. The owners didn't get a penny until closing.

I had a friend who sold a house for sale by owner a long while back (4 years ago). She had a buyer who wanted to cancel the contract...but the terms included no refund if he did.

While a home is locked in contract it essentially makes.it unmarketable. My friend did not change anything and the earnest money actually kept the buyer from walking when she refused to return it.

Not sure what you can do.


Funny story for us...I think in a the confusion of us writing checks and missing out on homes---evidently our realtor never collected a check on the house we bought. It was all in the contract, but no money ever changed hands. Oops.

If you had an inspection contingency, I don't see why you can't get your
money back. But I don't know the ins and outs of earnest money.

 

[The Mystery Machine]

Earnest money is earnest money. They are free to do with it as the contract states.

At the very least the contract should have stated the earnest money would be applied to the purchase price.

Did you just hand over earnest money without a detailed contract?

Who wrote your contact? It sounds as if your relator did not know wth they were doing.

 

[Northstar]

Hi everyone! My fiance and I are in a really tough situation right now. We made an offer on a home and the seller accepted. The seller's agent did notify us that he showed the house over the weekend and there were no bites on it. The seller's agent proceeded to tell our agent that he didn’t think his buyers were serious about purchasing the home. Of course we were serious we put an offer on the house! We put down a $2,500 earnest money deposit (our agent's idea to show the seller we were serious). Which later I find out is wayy to much, it's typically $1,000. So the check was cashed within 36 hours. Then, the seller comes back and raises the price of the home and claims she didn't calculate transfer taxes correctly and she need to pay off the second mortgage on her home and she had tons of debt to pay off. This should have been a red flag to us, but I loved the house and the area and it was close to my family. So we decided to purchase the home at the higher amount. In our contract it stated we needed to have an inspection within 5 days, so we signed on the 14th, and had it inspected within the allotted time. The inspection went terribly wrong, they found tons of things wrong that we had no idea about We were very upset. Our agent referred us to the attorney he normally uses for real estate transactions. The problem is our agent supplied our attorney with the inspection report late and therefore when she drafted up the letter requesting that repairs be made it was 1 day late per our contract. The seller declined. Then, we requested that the seller make some of the repairs, the seller again declined. And then we gave it another try and requested that the seller take off money on the purchase price, which the seller also declined. At this time we were completely finished with this deal. The seller and her agent left a terrible taste in our mouth. We were really upset by the way everything was handled and midway through this deal our attorney called and said, I'm going to finish this deal with you but I've decided to change careers, I will be handling bankruptcies only, real estate is too demanding. Fine with us at the time, but she has completely not responded to us for over a month and a half. We have sent her certified letters asking her what she is going to do to get our money back from the seller and no response. Prior to our attorney cutting us off completely she did request that the seller return the earnest money check to us and they declined because they stated that our attorney review period was not met, b/c our attorney notified the seller's attorney on the 6th day not the 5th. Luckily, we didn't pay our attorney for the work that she "failed" to do.

We did get a new attorney and we are scheduled to close on a new house this Tuesday , but still no one can afford to lose $2,500. I'm not sure what to do. I don’t think it’s fair because I believe that my fiancé and I were more than accommodating to the seller’s demand. Why won’t she release the money back to us? Why should I have to go to court and lose money. I'm the innocent first time homebuyer! Just a side note, the home has been on the market for 92 days now. Hopefully no one has to deal with that crazy seller!

Anyone have any suggestions?

Honey, you shouldn't waste your time being mad at the seller or expecting to get your money from them. They are within their rights.
It's your agent and the going-out-of-the-real-estate business attorney recommended by the agent who have done you wrong.

Since you haven't paid the attorney, no point going there... she probably isn't responding because she knows you don't have a legal leg to stand on. Your agent did not meet the terms of the contract, so you lose your money.

I think you need to have a tough conversation with your agent. The agent is responsible for you losing your earnest money because things were not completed on time.

 

[phorsenuf]

Hi everyone! My fiance and I are in a really tough situation right now. We made an offer on a home and the seller accepted. The seller's agent did notify us that he showed the house over the weekend and there were no bites on it. The seller's agent proceeded to tell our agent that he didn’t think his buyers were serious about purchasing the home. Of course we were serious we put an offer on the house! We put down a $2,500 earnest money deposit (our agent's idea to show the seller we were serious). Which later I find out is wayy to much, it's typically $1,000. So the check was cashed within 36 hours. Then, the seller comes back and raises the price of the home and claims she didn't calculate transfer taxes correctly and she need to pay off the second mortgage on her home and she had tons of debt to pay off. This should have been a red flag to us, but I loved the house and the area and it was close to my family. So we decided to purchase the home at the higher amount. In our contract it stated we needed to have an inspection within 5 days, so we signed on the 14th, and had it inspected within the allotted time. The inspection went terribly wrong, they found tons of things wrong that we had no idea about We were very upset. Our agent referred us to the attorney he normally uses for real estate transactions. The problem is our agent supplied our attorney with the inspection report late and therefore when she drafted up the letter requesting that repairs be made it was 1 day late per our contract. The seller declined. Then, we requested that the seller make some of the repairs, the seller again declined. And then we gave it another try and requested that the seller take off money on the purchase price, which the seller also declined. At this time we were completely finished with this deal. The seller and her agent left a terrible taste in our mouth. We were really upset by the way everything was handled and midway through this deal our attorney called and said, I'm going to finish this deal with you but I've decided to change careers, I will be handling bankruptcies only, real estate is too demanding. Fine with us at the time, but she has completely not responded to us for over a month and a half. We have sent her certified letters asking her what she is going to do to get our money back from the seller and no response. Prior to our attorney cutting us off completely she did request that the seller return the earnest money check to us and they declined because they stated that our attorney review period was not met, b/c our attorney notified the seller's attorney on the 6th day not the 5th. Luckily, we didn't pay our attorney for the work that she "failed" to do.

We did get a new attorney and we are scheduled to close on a new house this Tuesday , but still no one can afford to lose $2,500. I'm not sure what to do. I don’t think it’s fair because I believe that my fiancé and I were more than accommodating to the seller’s demand. Why won’t she release the money back to us? Why should I have to go to court and lose money. I'm the innocent first time homebuyer! Just a side note, the home has been on the market for 92 days now. Hopefully no one has to deal with that crazy seller!

Anyone have any suggestions?

Did you agree to the new price? Was there a clause for the inspection? If so was their an amount specified that the repairs can't exceed?

 

[DiSnEyFrEaK22]

Thanks Lisa. At this time, I don't think the seller has our earnest money. Base on ILL real estate law it should be held in an escrow account and neither party can get it unless the parties agree to release it. Our contract states, "Buyer shall serve Notice upon Seller or Seller's attorney of any defects disclosed by any inspection for which Buyer requests resolution by Seller, together with a copy of the pertinent pages of the inspection reports within 5 Business Days (this is our attorney's error because she served notice on the 6th day). If within 10 business day after the date of acceptance written agreement is not reached by the Parties with respect to resolution of all inspection issues, then either party may terminate this contract by serving Notice to the other Party, whereupon this contract should be null and void"

Looks like you got lucky and never had to deal with this mess

Thanks for responding Mystery machine - Our contract states, "In every instance where this contract shall be deemed null and void or if this Contract may be terminated by either Party, the following shall be deemed incorporated 'and earnest money refunded to the Buyer upon written direction of the Parties to Escrowee or upon entry of an order by a court competent jurisdiction." Well we did sign the contract before giving them the earnest money actually we signed 2 contracts before issuing an earnest money check. One for our original offer and the second when she increased the purchase price.

 

[DiSnEyFrEaK22]

Did you agree to the new price? Was there a clause for the inspection? If so was their an amount specified that the repairs can't exceed?

We did agree on the new purchase price b/c we loved the home. But, that was before we were aware of all the latent defects in the home. I attached the inspection clause above.

 

[chloelovesdisney]

I'd report the attorney to your state bar association. She should have been sure to get the report on time and there is no reason she shouldn't be responding to you.

I'd also report your real estate agent since she didn't get the report to the attorney in time. Doesn't she know where the money is being held? Seems strange.

 

[DiSnEyFrEaK22]

Honey, you shouldn't waste your time being mad at the seller or expecting to get your money from them. They are within their rights.
It's your agent and the going-out-of-the-real-estate business attorney recommended by the agent who have done you wrong.

Since you haven't paid the attorney, no point going there... she probably isn't responding because she knows you don't have a legal leg to stand on. Your agent did not meet the terms of the contract, so you lose your money.

I think you need to have a tough conversation with your agent. The agent is responsible for you losing your earnest money because things were not completed on time.

Thanks Northstar. I just can't believe that we are out of the money because of other people's errors. I am a very organized person and I would have never let any of this slip through the cracks. I do understand why our attorney is not responding but just surprised. I would like to file an investigation against her.

Also, I am friends with a few real estate agents and they said they never heard of a seller NOT returning the earnest money even if the contract specified time line was not met.

It's hard to be tough with my agent because he is a friend of a friend. But, if it means getting my money back then I guess I will do what I have to do.

 

[DiSnEyFrEaK22]

I'd report the attorney to your state bar association. She should have been sure to get the report on time and there is no reason she shouldn't be responding to you.

I'd also report your real estate agent since she didn't get the report to the attorney in time. Doesn't she know where the money is being held? Seems strange.

I am definitely reporting her to the ARDC because I know that I wouldn't want any of her clients going through what I went through ( even if she did change careers )

 

[disneyfans95]

One question, do you have a signed copy of the contract with the Sellers signature? You said you signed two copies, but never said if you are in possession of their signed version.

Without that, you don't have a leg to stand on.

If you do, skip the lawyer and go to small claims on the seller.

 

[DiSnEyFrEaK22]

One question, do you have a signed copy of the contract with the Sellers signature? You said you signed two copies, but never said if you are in possession of their signed version.

Without that, you don't have a leg to stand on.

If you do, skip the lawyer and go to small claims on the seller.

Yes, the second contract is signed by both parties. Should I proceed with a court case without a lawyer present?

 

[Silent1CB]

The VERY first thing we learned when buying a house was "do NOT sign ANYTHING without having lawyer look at it first". Especially paperwork prepared by realtors who have vested interest in making a sale go through and who do not have a legal background.

Our lawyer was a pip, but he was there to protect us all the way. Not just AFTER we had signed papers. He wrote things into our offer and contract that realtor didn't...BEFORE we signed it.

ALSO, never use or hire someone recommended by your realtor. Same situation. They are in business together. They have interests if the deal goes through or not. I know someone who bought a house that was later condemned for structural reasons. Realtor had arranged the initiail home inspection. Inspector "failed" to find some serious flaws because he wanted to continue to get work from this realtor. Make sense to you now?

Always hire your own lawyer BEFORE even looking at houses. And hire your own inspector. Heck we even found our own lender.

We also don't use friends or friends of friends when doing business. If people screw up with our money, I want to be able to take action against them without having to feel weird about it or ruin a friendship.

Buying a house is a huge BUSINESS DEAL. We don't do business with friends. Period!

 

[chloelovesdisney]

The VERY first thing we learned when buying a house was "do NOT sign ANYTHING without having lawyer look at it first". Especially paperwork prepared by realtors who have vested interest in making a sale go through and who do not have a legal background.

Our lawyer was a pip, but he was there to protect us all the way. Not just AFTER we had signed papers. He wrote things into our offer and contract that realtor didn't...BEFORE we signed it.

Yes, ITA. I also think it's a good idea to hire your own real estate attorney, not one recommended by the realtor.

 

[DiSnEyFrEaK22]

We used another attorney that our realtor suggested on our second transaction, so far so good. We are closing on Tuesday

But, in the future I will find my attorney.

 

[chloelovesdisney]

We used another attorney that our realtor suggested on our second transaction, so far so good. We are closing on Tuesday

But, in the future I will find my attorney.

I think it's always a good idea to ask someone that recently bought/sold a house if they liked their attorney and get a recommendation that way. Same for a realtor. Some are fantastic, some not so much.

 

[DiSnEyFrEaK22]

I think it's always a good idea to ask someone that recently bought/sold a house if they liked their attorney and get a recommendation that way. Same for a realtor. Some are fantastic, some not so much.

My friend used our first attorney twice and never had any problems with her. It's like she fell off the face of the earth Lol

 

[dis-happy]

$2500. is a relatively small amount; should be small enough for small claims court. Go file and list the seller and the att'y on the claim. Good luck!

 

[DiSnEyFrEaK22]

$2500. is a relatively small amount; should be small enough for small claims court. Go file and list the seller and the att'y on the claim. Good luck!

Will do! Thank you!

 

[buckler]

Real Estate agents should carry errors and omission insurance. If your agent make an error that caused you a financial loss, you might be able to recover your money that way.