Expert: Jim Root - 5/21/2008

Question
Hello,

I was attempting to purchase a bank owned property in California as an investment. I contacted the seller's agent who set me up with a buyer's agent who just so happened to be within her same group. Skipping along a little bit, I ended up getting the winning bid on the property. I signed a purchase agreement and joint escrow instructions on 2/10/08 and then a counter offer on 2/12/08. In this agreement, I gave a $3000.00 deposit. There was a loan contingency date of 3/10/08 and closing date of 3/17/08. During the time in between, I was working with my lender to finish securing my financing, which I had pre-approval for. My agent had me sign an Addendum to Residential Purchase Agreement on 2/29/08, which stated, "place back into escrow without penalty to buyer". My agent told me that this form was to get an extension and assured me that my deposit would still be refundable. Next my agent had me sign a Closing Extension Addendum dated 3/12/08, which asked for a closing date extension until 3/28/08 with no penalties for late closing to buyer. Finally, my agent had me sign a final Closing Extension Addendum dated 4/11/08 asking for a last extension of closing until 4/25/08 with no penalties and fees to buyer. Unfortunately, I was unable to get my financing straightened out. The whole time I was going through this process, my agent was telling me that I could still get my deposit money back if my financing did not go through. Now the seller is keeping my deposit, stating that I went past my original loan contingency date of 3/10/08 and that the extensions were to extend escrow not the loan contingency date. I feel like my agent has totally let me down by assuring me the whole time that I could get my deposit back, when in reality I was at risk early on. He had also told me numerous times when I questioned about my deposit that I could trust him and that even though he worked with the seller’s agent that he was there to help me.  Now my agent will not help me and is backtracking and stating that I was aware of the risks every step of the way. I realize that I should have been more careful and asked more questions, but I thought that is why you work with an agent, so that you get proper guidance from someone who knows the process.  I am just not sure, what I can do in this situation or if I have any way of getting my money back. I have spoke to my agent's broker, who is just giving me the run around stating that I should have known that my deposit was at risk based on the loan contingency date.  

Answer
STEFANIE--

You know the old saying "There are two sides to every story"? Well, in Real Estate it's not rue--there are as many sides to a story as there are people involved and who expect to make money on the "deal!"

I've read your version of the story, and from it I've formed an "opinion," but it could be way "off the mark," as I would have to review all of the documents involved--the original Purchase & Sale Agreement (for wording of the "Financing Contingency," the verbiage on the Closing Date& Extension possibilities, etc) as well as the wordings of all of the "Extension Addendums that you (and the Seller?) have signed. And I'd have to hear the Brokers (Both yours and the Listing Broker) side of the story as well!  Only then would my opinion be based on all of "the facts & findings" specific to this "case!"

But even then it would NOT be one that I could offer you.This is a LEGAL MATTER and you need a LEGAL OPINION and LEGAL ADVICE. As I am NOT a licensed Real Estate Broker/Agent nor an Attorney member of the Bar in your State, for me to give you an opinion or advice would constitute PRACTICING (REAL ESTATE) LAW WITHOUT A LICENSE!

Stefanie, anyone who  plans to enter the "Real Estate world" as an Investor NEEDS an Attorney available to answer  questions, provide legal advise and guidance, as too often "good deals" turn out to be "too good to be true!" Get ahold of a Lawyer licensed in California (and specializing in Real Estate Law)and have him/her help you with this matter! GOOD LUCK--I hope you can get your Deposit back, I FEEL that you MAY have been MISLEAD by "someone" and shouldn't be penalized & that maybe the "Misleaders" should be somehow penalized!(That's NOT a LEGAL OPINION, however!)

--JIM