Expert: Dick Dennis - 5/13/2008

Question
Hi,
We were going to buy a house but the inspection turned up an issue with the roof. The seller's disclosures stated 1 layer of composite. But the inspector said it composite over wood shake shingle and that many major insurance companies won't insure these types of roofs. We called State Farm and they would not insure the house. We asked the seller to replace the roof and she declined, so the deal was off. We faxed a cancellation letter to the realtor, but then found out the seller would not sign it, so our earnest money of $1000 is being held in escrow. We even provided the seller a copy of a letter from State Farm explaining why the roof is uninsurable, but she won't sign. Now I see that her house is in "backup". Can the seller actually accept another offer when our earnest money is still out there? I would think this would be a stain on the title. We tried calling the title company and no one knew, and the real estate company has no idea what is going on either. We live in Missouri. Please let us know if it's possible for her to take another contract and have two earnest money deposits on the same house. Also, if we go to small claims court, do you feel we have a good enough reason to win? This was a short sale, so we also had to wait a full month for bank approval, and I feel we were very accomdating to the seller. The seller's disclosure was also incorrect.  Thanks!

Answer
As long as your original offer did say that you, as the buyer, had the right to cancel the transaction with the return of your deposit, Michelle, the seller doesn't have a leg to stand on. And your Realtor, the agent that represents you, should have said so to her agent. If it is the same agent, then you should take it to small claims court. But before you do, send a letter (certified mail) to the seller and her agent--your agent should have done this) that she will not be able to sell her house until you get your deposit returned. If you get no satisfactory answer, then you take her to small claims court and tell the title company you want to stop any other transaction from going through. Be sure to save all the paper work involved in this transaction because the small claims judge will want everything you have to substantiate your side. I do wish you well.

Dick Dennis