Expert: Dick Dennis - 10/12/2006

Question
I have a follow-up question regarding the earnest money. Now our realtor wants us to split the $1000 earnest money with the seller of the other house that I was trying to purchase. Meaning take $500 with the seller and our realtor wants to write a check for the other $500 dollars to us therefore giving us our total earnest money of a $1000 back on that house. The question is: Would this release our realtor from any future litigation and or liability from us,since we will be trying to sue her in small claims court later on?
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Followup To

Question -
I AM TRYING TO SELL MY HOME IN SUGARLAND TX.  FIRST, MY REALTOR INFORMED ME THAT WE HAD AN OFFER ON THE HOUSE OF 255,000 AND OUR LISTING PRICE WAS 279,000.  WE NEGOTIATED WITH THE PERSPECTIVE BUYER'S AGENT AND ACCEPTED AN OFFER OF 260,000.  OUR REALTOR INFORMED US THAT THAT THE BUYER WAS PRE-APPROVED AND PUTTING DOWN 20 PERCENT. AS A RESULT, WE WENT THROUGH THE WHOLE PROCESS.  THE BUYER HAD OUR HOUSE INSPECTED. WE FIXED ALL OF THE ISSUES.  30 DAYS LATER, OUR REALTOR INFORMS US THAT THE BUYER'S FINANCING FELL THROUGH.  IT WAS THEN DISCOVERED THAT OUR REALTOR NEVER PREAPPROVAL LETTER FROM THE BUYER. OUR REALTOR INSTEAD TELLS US THAT THE BUYER WAS PREQUALIFIED AND NOT PREAPPROVED.  AT ANY RATE THE BUYER WAS NOT ABLE TO OBTAIN THE FINANCING BY THE STIPULATED DATE IN THE CONTRACT AND THEREFORE WE ARE ENTITLED TO THE EARNEST MONEY OF 1000 DOLLARS.  HOWEVER, THE BUYER AND HIS AGENT ARE NOT RELEASING THE EARNEST MONEY AS PER THE CONTRACT.  HOW CAN I GET THIS EARNEST MONEY? I HAVE LOST A GREAT DEAL OF MONEY ON STORAGE FEES AND HOTEL COST.  PART TWO OF THIS DEBACLE IS THAT I HAD ANOTHER CONTRACT ON ANOTHER HOUSE CONTINGENT ON MY ABILITY TO OBTAIN FINANCING.  SINCE THE CLOSING ON MY HOUSE FELL THROUGH, I DON'T QUALIFY FOR A MORTGAGE ON THIS HOME.  BUT I DID MEET THE CONTRACTUAL DATE OF BACKING OUT OF THE DEAL IF I DID NOT OBTAIN FINANCING.  NOW THE SELLER OF THIS HOME REFUSES TO RELEASE MY EARNEST MONEY OF 1000 DOLLARS.  SO BASICALLY, I AM OWED 2000 DOLLARS IN EARNEST MONEY THAT IS NOT BEING RELEASED.  WHO DO I HAVE A LITIGATION CLAIM AGAINST TO RECOVER THE MONIES OWED TO ME?

Answer -
CONTINGENCY. CONTINGENT. Remember those words, Emory. Chances are very good that the purchase agreement for your house said that the purchase to buy your house was CONTINGENT on that loan going through for the buyer. And any deposits should be returned to him if he was not successful.

I have to admit that your Realtor really screwed up and if it was me, I would be taking him to small claims court for all the costs involved because he virtually assured you that the buyer's loan approval was a done deal. He should have known the difference between pre-approved and pre-qualified. Granted, many loans these days are falling through, but he should have protected your interests and discouraged you from accepting the offer in the first place. Trouble is, he was anxious to earn a commission and you were anxious to sell your house, so you both had a blind eye on the deal.

As for your purchase, it was the other way around. You apparently did not make sure (or your Realtor who made the offer to buy) that your purchase was CONTINGENT upon the SUCCESSFUL CLOSE of your loan AND sale.

If you feel those deposits belong to you, you just don't sign the release of the purchase of your house deposit and take both parties to small claims court. Please realize that by not returning the deposit to YOUR buyer, your house's sale would be held up against anyone else from buying it. All this because your house's Realtor screwed up.

You can go to a REAL ESTATE attorney and ask for help in this matter, but please understand that the attorney may refuse to represent you because of the comparative small amount involved, unless you can prove that you have lots more money involved.

I do wish you well.

Dick Dennis          dixiedee13@aol.com

Answer
I got a better idea, Emory. Have her give you the entire $1,000 deposit and then sign a release to her allowing her to claim whatever she wants from the seller of the other house. She is going to have you sign a release anyway before she gives you a dime. At least you have that decided. You won't want to sue here anyway as long as you get your $1,000 back.

If she is the agent on the sale of your house, then make sure that any release does not include anything that has to do with the sale of YOUR house. You may still sue her on that.

I do wish you well.

Dick Dennis