Expert: Karyn Foley - 11/23/2009

Question
I signed a contract to purchase a home in New Jersey and take advantage of the 1st time home buyers tax credit being offered. The contract was signed in May, $6,000 of deposit monies were provided.  Closing date was set for July 10th.  House did not appraise for the amount of the loan, seller did not want to keep the contracted amount of 15K for sellers contribution once the house did not appraise.  Title search revealed a judgment which could not be settled in order to receive the loan.  No mortgage commitment was ever provided.  Seller has since put the house on the market, house is under contract with new buyer and after months of requesting deposit monies back I have just been told that the seller is filing a claim to keep the deposit monies for breach of contract.  I don't understand, legally, the contract was void when no mortgage commitment was given and then again when the seller put the house back on the market.  Now I am being told by our closing attorney that he will be charging a fee for his work on this non-closing deal but the Seller refuses to release the deposit monies being held in escrow.  Please help, I ahve lost so much money already in inspection, appraisals, updating credit, withdrawing money to buy home from 401K and now No house, please, please, help me!

Answer
Dear Daneen:  I do not have a copy of your contract, so cannot determined expiration dates and contingencies.  At this point, I think you need to consult a real estate attorney.  We real estate brokers cannot "practice law without a license".  I would not even had addressed your email but I felt so bad about your situation.  Different practices are in place from area to area, state to state, but law is the law.  An attorney would probably save you money in the long run, especially by helping you get back the deposit monies held in escrow.  INitially, however, you should discuss this with your agent, and if this is a help in understanding your rights, you may elect to take this to small claims court.  You may also have a claim to stop the seller from transferring title until you have signed off a cancelation or receive your money back.  Again, I am not an attorney and do not know if this could be the case.  Doesn't your closing attorney have any valid advise or offer any suggestions?  You need some one who is strong and in complete knowledge of all the facts and rights of all parties to set you in the correct direction.  Your seller may also have accountabiity as they did not reveal a judgment and may have played a role in this mess.  Once the house did not appraise, your choice would probably have been to either put up more money or withdraw from the contract as yu were not able to get the loan required - if this was all within the contingency period.  Please please help yourself by hiring a good lawyer, not sending out these questions to a lay person who does not have all the facts.  Good luck and I hope you prevail and get money returned.  Karyn Foley