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Buying or Selling a Home/Obtaining earnest deposit back from builder

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Expert: - 8/15/2008


Question
My husband and I paid $15,000 for an earnest deposit on a new build home with Keystone American in Arizona. Keystone American homes went into foreclosure and they did not complete the building of our home nor provide us with the model home they said they could sell to us. We were due to close escrow on July 24th and move into the model home. They could not get a title company to provide a title on the home and close escrow because they had mechanical liens on the property. By the time we found out we had entered into a rental contract of our home we were in for a year and had to move out the next day. We are currently homeless, living in hotels and temp. apts. When we went to Keystone American to request our earnest deposit back we were told there is no money and they couldn't give it to us. We now have no new home, no money, our previous home is rented for a year and we are currently homeless with 4 children. In addition to the $15,000 they had us pay $400 for an appraisal on the home that they could not close escrow on due to the mechanical liens.
Is there any way we can obtain our money back?
Do we have any legal recourse?

Answer
Hello Stephanie - Let me begin by saying I am not an attorney and this is not to be considered legal advice. You must obtain an attorney. The problem is that you have already moved out of your existing home. Legal counsel may have instructed you that you did not necessarily need to fulfill the obligation on your rental agreement of your existing home. There may have been penalties but it would not have displaced you. Possibly providing alternate rental opportunities for the tenant may also have been an option. Now that you are no longer in the home there is little that can be done to assist you there unless legal counsel knows of other options. As far as the EARNEST MONEY deposit you paid to the builder this depends on whether it was placed in a neutral account or placed directly into the builders general fund. If it was the general fund then you probably have lost it, but once again, talk to a real estate attorney. Finally, if it was placed in a neutral account with a title company (you know this by who the payee was) then you should be able to recover your deposit. Other opportunities depend on whether the builder is seeking reorganization or to cease operations. Unfortunately these definitions and your legal opportunities are outside of a REALTORS area of specialty and therefore I must only refer you to an attorney who specializes in real estate. I know this does not definitively answer your question but I hope this has provided additional information for you. - Todd

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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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