Expert: Dick Dennis - 1/14/2010

Question
QUESTION: I was selling my house in Long Island, New York. I went to contract in June 2009 with a buyer. The contract had a mortgage contingency. The buyer put a $12,000 deposit down. There was language in the contract that said if the buyer received a commitment, even if it was conditional , in the time specified that the deposit would be forfeited if we failed to close. The buyer did receive a commitment with what seemed to be a routine condition - that they show proof that they paid their taxes. It turned out they hadn't paid their taxes or even filed a tax return. We extended the contract time to allow them to do this, and other conditions started popping up. Their credit rating began to slip, so they had to pay off various credit cards; they needed flood insurance (had they closed at the original date, that wouldn't have been necessary), etc, etc. Finally they applied to a second bank, and also got a conditional commitment, but once again, routine items turned into insurmountable items. We issued a time is of the essence for DEC 15, and that passed. We now have the $12,000 deposit. Our attorney says that it needs to be deposited with the Nassau County Clerk. What needs to happen for us to be able to get that deposit money?

ANSWER: You would need to consult with a REAL ESTATE attorney, Melanie. That person knows the laws and requirements in Nassau County. Any time a buyer fails in his job to get the loan . . . for whatever reason . . . unless it is obvious that the buyer deliberately killed the deal, then the deposit MUST be kept in a neutral depository until it is decided who should get the deposit.

However, more than six months of valuable time passed, and you allowed the buyer some leeway as for the transaction was concerned and a good real estate attorney could make a good case IN COURT stipulating that you should get that deposit. If you choose to just keep that deposit, the buyer, in all likelihood, would take you to court to retrieve that deposit.

If that attorney you mentioned is a real estate attorney, I would pay attention to what he says. Or you might want to arbitrate the matter where you keep at least half the deposit (maybe it will pay for half a year's property taxes). If you had a Realtor handle this transaction, what does that person say. He/she no doubt has an office attorney to help you along. I do wish you well, Melanie.

Dick Dennis
dixiedee13@aol.com

---------- FOLLOW-UP ----------

QUESTION: Thank you for your response. I'd like to clarify that I am using a real estate broker and the deposit has been held in her escrow account where it still lies. She is finding out what the costs are to deposit it with the Nassau County Clerk as the next step. My question really is what needs to happen once it is with the court. Do we need to petition the court to release it? What happens next? Is my only option to hire a real estate attorney or can I find out what to do another way.

Answer
The deposit is exactly where it should be, Melanie. Your broker CAN NOT release the deposit to either you or the buyer until it is decided, in written documents I am sure your broker has, who should get it and how much of it. The broker actually does not want that money sitting there, therefore, your broker should be making attempts to settle this thing lots easier than with attorneys. If the broker sees that you are in a logjam, then the attorneys are brought into the picture. My guess is that your broker is going to get you and the buyer to settle somewhere in the middle.

Good luck.

Dick Dennis