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The agent says the buyer can drag his feet for months waiting to decide what he wants to do about any claim on the earnest money but until he makes a move we can't sell the house and will lose thousands and thousands of dollars. A lawsuit is possible but we can't put the house back on the market during the lawsuit and we have to move.
I am sure the buyers real estate agent is not happy either because she is out her 3% and lost time and effort.
Wait a minute. Aren't the buyers going to buy another house?
Realtors know that until there's a closing, no commission is a given. A good realtor is going to be fine - you win some, you lose some.
Also, how can they stop you from selling your house? They aren't going to buy it, so you are free to sell it to someone else. The contract is dead. They didn't close within the time frame of the contract, from what I gather, so sell it to someone else.
I do not know where you are located or what your contracts state. However, in PA the agreement of sale has a box that the buyers agent can check that states that the seller is limited to keeping the emd only. Also, if the buyer does agree to give the emd to the seller, some agencies listing agreements state that they get a cut of it. As far as not being able to put the house back on the market. If your contract stated that settlement was suppose to happen on a certain date and that date passes without an addendum signed then you are out of contract and free to do as you with. I am only speaking on how it is in PA.
This does not appear to be an issue that requires any law suit at all. There is no way I can imagine that a buyer can cancel the contract, then have any attachment on your house that can prevent it from being sold. That is pure hog wash.
It would also be nearly impossible to force a buyer to buy a home (specific performance). The reason for earnest money is that it's difficult to fix actual damage in the event of a buyers breach, therefore, the earnest money can be deemed a reasonable estimate of damages, and the seller may, at their option, accept the earnest money as the sole right to damage.
Read your contract clauses that apply to RELEASE OF EARNEST MONEY and CURE PERIOD (if there is a cure period in your state) and BREACH.
What does the written cancellation note say? The cancellation must be in writing. That will be a key.
If they just want to back out, then just send that letter to the title company, and tell them that you accept the cancellation, and that in accordance with the contract, that the buyer is forfeiting the earnest money.
Call the escrow officer and talk to them, after you have the written cancellation letter.
I have talked to the settlement person and the real estate agent. Both highly experienced and knowledgeable. Here is what they tell me:
1) If the sale does not go through on the closing date, the Earnest Money will sit in an escrow account until both parties sign a document releasing it. The buyer will not sign the document because he wants to play hard ball thinking we will fold and agree to ask the escrow company to refund their earnest money.
2) Until both parties agree to sign a document that money can sit in the account for years.
3) We can go to court to force the escrow company to release the money to us but while the case is in court we can't put the home back on the market. The buyer will use that knowledge to force us to settle and give him most if not all of his earnest money back.
4) They are renters and decided not to buy a house in the next year or so. They said the karma is not right now!
What is the wording of the buyers cancellation letter?
As long as the buyer has given a written notice of cancellation, then they no longer have a claim on your house. You can put it back on the market and sell it.
The only thing being contested is who gets the earnest money.
The title company is a neutral third party, and they use the contract documents to make their determinations. That is their job. They must read the cancellation letter, and they must apply that to the contract language to make a decision on who gets the money.
Read the escrow contract that you signed with the escrow company at the time escrow was opened. Better yet, get your agent off his butt and have him come over and read it with you. Tell your agent that you expect him to get the earnest money back for you. Part of his job is protecting you in these situations. Make him earn his pay. If he doesn't, then you need to fire him. You shouldn't have to come on C-D asking questions like this. Your agent should be working his tail off for you, but he appears to not be.
When you find the part that describes how the title company must determine who gets the earnest money then contact the branch manager, or vice president, or president, and demand the earnest money.
If they refuse, let them know that you will have your attorney go after the title company.
Then contact a local "real estate" attorney and take all the documents, purchase contract, title company escrow contract, and especially the cancellation letter. It will cost you a couple of hours. The attorney will probably draft a letter demand the title company release the EM to you.
But you must have that written and signed cancellation letter giving the reason.
If your purchase contract has a "cure period" then your agent needs to send the buyer the cure period notice. If you have a cure period, then there is NO BREACH until the cure period, which is a notice of a possible breach, is provided to the buyer.
There is no cancellation letter just verbal comments from the buyer of the house that he will do what he can to get his earnest money back. He is not silly enough to put anything in writing, he is just dragging his feet because he knows that he can hold us up and we may fold and just let him get his money back. Until we get something in writing from him the house will sit there empty.
Quote:
Originally Posted by Captain Bill
What is the wording of the buyers cancellation letter?
As long as the buyer has given a written notice of cancellation, then they no longer have a claim on your house. You can put it back on the market and sell it.
The only thing being contested is who gets the earnest money.
The title company is a neutral third party, and they use the contract documents to make their determinations. That is their job. They must read the cancellation letter, and they must apply that to the contract language to make a decision on who gets the money.
Read the escrow contract that you signed with the escrow company at the time escrow was opened. Better yet, get your agent off his butt and have him come over and read it with you. Tell your agent that you expect him to get the earnest money back for you. Part of his job is protecting you in these situations. Make him earn his pay. If he doesn't, then you need to fire him. You shouldn't have to come on C-D asking questions like this. Your agent should be working his tail off for you, but he appears to not be.
When you find the part that describes how the title company must determine who gets the earnest money then contact the branch manager, or vice president, or president, and demand the earnest money.
If they refuse, let them know that you will have your attorney go after the title company.
Then contact a local "real estate" attorney and take all the documents, purchase contract, title company escrow contract, and especially the cancellation letter. It will cost you a couple of hours. The attorney will probably draft a letter demand the title company release the EM to you.
But you must have that written and signed cancellation letter giving the reason.
If your purchase contract has a "cure period" then your agent needs to send the buyer the cure period notice. If you have a cure period, then there is NO BREACH until the cure period, which is a notice of a possible breach, is provided to the buyer.
Why can't you write a termination agreement that says that you both release each other from the purchase and sale of the property but agree to resolve the earnest money later. That is what I do with disputed funds.
They can't get that $8k either without you. So I would try and ensure obligations to complete the contract are gone and get the house back on the market. Then I'd deal with EM later.
I have had it happen one week prior to close the buyers walked because they changed their minds. My clients got the EM.
I also can tell you it impacts the resale nada. I've had situations like that happen before, with financing fails, and in some cases I got more for my sellers. Help me out here agents...I think something like 25% of transactions are failing over financing these days so it is really common to have a late sale fail. I'm not hearing stories of home prices dropping 10% as a result of that. It isn't true for my area, anyway.
There is no cancellation letter just verbal comments from the buyer of the house that he will do what he can to get his earnest money back. He is not silly enough to put anything in writing, he is just dragging his feet because he knows that he can hold us up and we may fold and just let him get his money back. Until we get something in writing from him the house will sit there empty.
Ok. If he has not closed escrow by the close of escrow date then he is in breach of contract. (Again, he may not automatically be in breach. If your contract has a "cure period", then your agent MUST send him a cure period notice that says he is in potential breach and it must be cured in 3 days). That gives him 3 days to close escrow.
If I were your agent, and the buyer did not close escrow and offered no request for extension, then I would be all over the title company with the purchase contract in hand, demanding they release the earnest money to you.
If you're still reluctant to contact an attorney, then you need to contact your agent's broker. (You are the brokers client. The agent is really only an agent for the broker) Advise the broker that the buyer missed the closing date and is not closing, and is in breach and you want the earnest money forfeited to you in accordance with the purchase contract, and that your agent is not helping you.
You should also tell him that you want to fire the agent because he is not working on your behalf.
As long as the escrow date has passed, and you notify the title company that you are cancelling the contract due to the buyers breach, the contract is then over, and you can sell your house.
If the broker doesn't help, but I believe he will, tell him that your next step is to take legal action. Then don't hesitate to contact a real estate attorney.
Again, as long as the escrow date is passed, and the buyer is in breach, and you cancel the contract due to the breach, the only thing in contention is the earnest money. You can sell your house. But you need to fire this agent because, from what I'm reading, he is not doing his job.
Your contract probably has a"Breach" clause similar to this:
Quote:
The parties expressly agree that the failure of any party to comply with the terms and conditions of Section 1d to allow COE to occur on the COE date, if not cured after a cure notice is delivered, will constitute a material breach of this contract, rendering the contract subject to cancellation.
In which case you would write a demand letter to the title company stating that the buyer is in breach of the contract, and due to the breach you are cancelling the contract, and demand the earnest money be forfeited to you in accordance with the purchase contract, (and state the paragraph).
I'm not offering legal advice. I'm giving an opinion. I still advise you to consult an attorney.
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