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Buying or Selling a Home/rescinding purchase agreement

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Expert: - 4/2/2008


Question
I verbally agreed to sell my house to someone about 2 months ago. He brought over the $500 earnest money and the purchase agreement. I cashed the earnest money check, but there were some issues on the purchase agreement that we did not agree on so we did not fill anything out or sign it.

I now have a problem and need to back out of the purchase agreement and return his earnest money. Is this possible? I know that I implicitly agreed to the purchase agreement by cashing the check, however, nothing on the agreement is filled out or signed. The only parts written other than the "standard" legal framework is the purchase price and address. The section on clear title states that if Seller is unable to provide a clear title, either party may rescind the agreement by giving written notice. There is a past mortgage on the house that was paid but never cleared properly from the title and so there is not a clean title. Is this enough? Is there a part of a "typical" purchase agreement that I can look to for reason to rescind?

Thank You,
Joseph Hogue

Answer
Hello Joseph - I would definitely recommend talking to a real estate attorney in your state. Each state deals with this situation differently. However, am I correct in my understanding that you deposited the earnest money check but never signed the contract? The earnest money may be considered the buyer's 'right to first purchase' (which means until you return the earnest money this individual may have first option to purchase at a price and terms agreeable to you.) Yes, the terms of any contract are negotiable until signed or coutnersigned but if you have never come to a 'meeting of the minds' (supported by a signed contract including the specificity of the terms agreed to) there may be options for you to reject the offer providing you refund hate earnest money. I would talk to an attorney that specializes in real estate immediately. Do not refund the money until you talk to an attorney and do not sign anything.... Remember, you have not come to a meeting of the minds... yes you prematurely deposited the earnest funds but depending on the laws in your state this premature deposit of the EM check should not mean you accepted the original terms of the contract. I would also not negotiate terms of the contract you never signed... in other words do not use the clear title provision since your position is that there never was an accepted contract... so there are no provisions for anything. Don't be mislead... even if you receive a legal letter from the buyer or a legal representative of the buyer... you have rights too and need to seek an understanding of those rights from your own legal counsel. If money is an issue, usually most attorneys will provide you with 30-60 minutes of face time as they determine if you have a case... at least they can provide you knowledge of your rights and a direction. Maybe this attorney could write a letter on your behalf to the buyer stating there is no contract... or that the seller is not liable for the provisions of the contract therefore sign a mutual release and give the earnest deposit back once the buyer signs the release. A real estate attorney will be able to provide you with many options depending on your states laws. Remember, I am not an attorney so this is not to be construed as legal advice although this is to be considered real estate information to assist you in seeking proper counsel. I hope this helps - Todd

Buying or Selling a Home

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Todd C. Menard

Expertise

National Association of Realtors Code of Ethics and Professional Standards * Contract Questions: 05/05 Arizona Real Estate Purchase Contract, Exclusive Buyer Broker Contracts, Listing Contracts and associated contract documentation as it relates to boilerplate, covenants, contingencies, procedures and procedures. * ARMLS Arizona Regional Multiple Listing questions * Real Estate Professional Standards and Practices, Ethics, Obligations, Duties * Agency relationships in Arizona, Procurring Cause * Questions typicaly arising during the listing period * Questions typically arising during the escrow period * Questions about working with a real estate agent/REALTOR * Questions Related to New Home Builders

Experience

National Association of REALTORS Board of Director (2011) Arizona Real Estate Salesperson License (1991-1995), Arizona Real Estate Brokers License (1995-Present), Arizona Association of REALTORS Board of Directors (2008-Present), Arizona Association of REALTORS Professional Standards Committee (2008-Present), AAR Certified NAR Code of Ethics and Professional Standards Instructor, Southeast Valley Regional Association of REALTORS President-Elect (2011) Southeast Valley Regional Association of REALTORS Board of Directors (2008, 2009), Southeast Valley Regional Association of REALTORS Grievance Committee Chairperson (1998-2007), Southeast Valley Regional Association of REALTORS Bylaws Committee (2008-Present), Southeast Valley Regional Association of REALTORS Education Committee (2008), Arizona Association of REALTORS Forms Committee - Residential Purchase Contract (2005), Arizona Association of REALTORS Forms Committee - Residential Rental Agreement (2008), Arizona Association of REALTORS Forms Committee - Buyer Broker Agreement (2009), Arizona Association of REALTORS Presidents Advisory Group, Road to Professionalism (2009), Arizona Association of REALTORS GRI Curriculum Review Committee (2009), Arizona Department of Real Estate, Commissioner's Education Advisory Group Sub-Panel B (2010) Arizona Department of Real Estate, Commissioner's Statute and License Review Committee (2007)

Organizations
National Association of REALTORS, Arizona Association of REALTORS, Arizona Real Estate Educators Association (AZREEA), Arizona Regional Multiple Listing System (ARMLS), American Notary Association, Southeast Valley Regional Association of REALTORS (SEVRAR), Southeast Valley Regional Association of REALTORS Women's Council of REALTORS (2010-Present), Phoenix Association of REALTORS (1994-2000, 2005-2009), Scottsdale Association of REALTORS (1994-2000, 2005-2009), Maricopa/Glendale Association of REALTORS (1994-2000, 2005-2009),

Publications
"Real Estate in 2008"- Lifebushido Publishing (Contributory Author), SEVRAR Magazine, Internet Crusade, RealTown ListServe, Blogger.com, Active Rain

Education/Credentials
- AAR Certified Ethics and Professional Standards Instructor, Graduate REALTOR Institute (1993), Certified Negotiation Expert (CNE), Over 100 Hours of annual real estate continuing education, Annual Ethics and Professional Standards Development Workshops as required by the National Association of REALTORS, Approx. 36 hours of NAR Code of Ethics training annually, Numerous IDW, Seminars and Train the Trainer programs, Business Management Degree - 1981

Awards and Honors
2009 REALTOR of the Year Award, Southeast Valley Regional Association of REALTORS (10,000+ Members), Double Platinum Production Award ($45,000,000 Sales Volume)- Keller Williams Realty Int'l (2001), Top 15 Sales Production Keller Williams Realty International (2001), Top 5 Sales Producation Keller Williams Realty Southwest Region (2001), Top Recruiter Award - Keller Williams Realty Int'l, SW Region (2002), Who's Who in U.S. Executive (1983), Who's Who in U.S. Real Estate Professionals (2007)

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