Expert: Lori Frankfort - 11/30/2007

Question
Hi,

I have a question regarding the "earnest deposit". In July 07, we agreed to
purchase a new home from Shea homes. We signed a signed a "receipt of
deposit" as well as a purchase contract and then we put down a deposit of
25k. The "receipt of deposit" states that we had until 11/7/07 to change our
mind and the check would remain uncashed until then. The purchase contract
said that we had 3 days from the signing of the contract to change our mind.
When we attempted to cancel and get our money back on 11/3/07, our Shea
rep said that we could but we wouldn't get our money back. She said that the
"receipt of deposit" was dated incorrectly but it's not legally binding and the
purchase contract supersedes it. Our contention is that we would not have
signed the purchase contract if it wasn't represented to us that we'd have
several months to change our mind. Do they have a right to keep our deposit?

Answer
Hi Kenneth, Do you have copies of the documents you signed?  I'm very familiar with the purchase agreement, however I'd like to know the wording in the "receipt of deposit", which I have never heard of before.  I'm not sure why they would have you sign something that they consider not legally binding, but at any rate the mistake on that document is an error on their part, and they owe you back your deposit.  You need to look in your purchase agreement and see if you initialed the "arbitration" and "mediation" clauses.  One last question, did you ever sign a document that was called "Contingency Removal"?  It's hard to answer your question exactly without seeing what you signed.  If you want to email me the documents I'd be happy to give you a more definitive answer.  My email is lorifrankfort@aol.com.

Best,
Lori