Expert: liznarr - 2/22/2008

Question
HI,
My husband and I were buying a house back in December. We made an offer stating that we were going to purchase the house based upon us getting a loan at at a 6% interest rate. A week later we signed the earnest money agreement, gave them a earnest money check to the seller. He was to retain it. We informed him that we wanted sellers disclosures with the contract and he said he would get back to us. At the end of January we found we were disqualified for the loan. We tried to tell the seller that we needed to retract our offer. He refused to talk to us. He sent us disclosure forms in the mail a few days there after. After receiving the sellers disclosure forms we sent a letter back saying that according to an Oregon law we have five days after receiving the disclosure forms to retract our offer. He refused the certified letter. Does this mean that we are able to obtain our earnest money back? What advice can you give?

Answer
Hi Sarah,

When problems arise in a real estate transaction, the Contract of Sale is the document that you need to refer to, along with any applicable law.  

At the end of my reply, I have given you a reference I found online for Oregon law as it relates to Seller disclosure.  You should independently verify this information, however, to make sure what I found is, in fact, current law in Oregon.

I am hoping that your Contract with the Seller had language in it stating that your Purchase was contingent upon financing.  If so, the fact that you were unable to obtain your loan (if you applied timely and met all other conditions of your Contract of Sale) should qualify you for the immediate return of your earnest money, separate from the issue of the late delivery of an unacceptable Seller property disclosure.

On the Seller disclosure issue, based simply on the facts as you presented them, unless you waived your right to review and approve the Seller’s disclosure statement at or prior to entering your sales agreement (or if your sales agreement had any such language in it waiving your right), it certainly sounds like you should be entitled to receive your earnest money back.

I did a cursory review of the Oregon seller disclosure statement I located online, but did not note any deadline for “when” the form is to be filled out and presented to a Purchaser.  In my state, it must be done PRIOR to finalizing a Contract of Sale.  If you can find out if there is a deadline for producing the disclosure in Oregon, this would be additional power for you in any action you bring against this unethical seller.

Also, if the house you offered on was built PRIOR to 1978, Federal lead-based paint disclosures apply.  See http://www.choicea.com/forms/FOR%20SALE%20BY%20OWNER%20FSBO%20OREGON%20SELLER%20...  

I am not separately licensed as an attorney, and I cannot give anyone legal advice.  My suggestion to you now would be to contact an attorney for legal advice and begin legal action to recover your earnest money if the attorney thinks this is your next step.  

In my state, the law is that if a certified letter was sent to the last address of record for an individual, the fact that it was refused does not legally excuse someone from “receipt.” If Oregon laws are the same or similar, you have done your duty, and the refusal to accept your certified letter should not a defense for the Seller.

In SC where I live, we have a magistrate’s court system whereby an individual claiming less than $7,500 in monetary damages can represent himself and save attorney’s fees.  Possibly Oregon has a similar system.  If you take this route, just have all your documentation with you when you go to Court and present it to the presiding Judge.

I’m copying below for you Oregon statutes that you can read regarding the Seller property disclosure statement.  Perhaps you will find some information that might give you additional helpful information:

From http://www.oregon.gov/REA/
SELLER’S PROPERTY DISCLOSURE STATEMENT

105.462   Definitions for ORS 105.462 to 105.490

105.464   Form of seller’s property disclosure statement

105.465   Application of ORS 105.462 to 105.490, 696.301 and 696.870; disclosure statement

105.470   Exclusions from ORS 105.462 to 105.490, 696.301 and 696.870

105.475   Buyer’s statement of revocation of offer; criteria

105.480   Representations in disclosure statement; application

105.485   Allocation of burden of proof

105.490   Effect of ORS 105.462 to 105.490, 696.301 and 696.870 on rights and remedies

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth