About Eric Sexton Expertise All aspects of buying and selling homes including: General real estate questions, Contracts, Negotiations, surveys, title work and general questions about mortgages. I CAN NOT GIVE LEGAL ADVICE AND WILL NOT BE ABLE TO ANSWER QUESTIONS WHERE LEGAL ADVICE IS NECESSARY.
Experience
I have been a real estate agent for 6 years and a broker for 2 years.
Organizations National Association of REALTORS and Texas Association of REALTORS.
Expert: Eric Sexton Date: 6/19/2007 Subject: Earnest Money
Question QUESTION: Hello,
I was under contract to purchase my first condo. The inspection found problems w/ the ac. The seller extended the option period for an addition 7 days and agreed to have an ac guy give an estimate and do the repairs. She and her attorney, waited until the last day of the option period at 5pm, to tell me that, 1) they did not have an estimate or repairs done, 2) that they would give me 750 for the repairs (they just made up this number. we had no way of knowing how much the actual repairs would cost since we had no estimate) 3) that the seller did not have to sell if i didn't agree, she would just rent it 4) and, that the seller was out of town and unavailable to extend the options period or negotiate. So, I felt as if I had no other choice than to cancel the contract. I signed a release for the earnest money ($1,000)a week ago. Can they keep the earnest money if I cancelled the contract before the end of the option period? I have not heard from them since I cancelled the contract. Please advise. Many thanks, Leslie
ANSWER: Leslie,
You do not state whether or not you used a real estate agent. If you did, this information is not meant to supercede anything they might have recommended to you.
The option period is one of the terms of the contract that most protects the buyer. It appears to me as though the seller was very aware of what she was doing.
You did the right thing. Not knowing what was specifically wrong with the AC, you could have purchased the condo and then found out a new unit needed to be installed. Recent laws require that any new AC unit being installed must be a SEER 13 unit. Depending on the existing unit, the new unit might have required modifications to the property that would cause you to incur additional costs.
With that being said, let's talk about your earnest money. If you can answer the following questions for me, it would help me give you a more detailed answer:
*Do you have a receipt of some sort (FAX confirmation page, courier receipt) showing that the seller or her attorney (or real estate agent) received the notice? If not otherwise stated in the contract, the option period ends at midnight on the day in question.
*Was the lawyer asking as the escrow agent or were you and the seller using a title company? If you were using a title company, I would immediately contact the title company and ask them the status of your earnest money request.
*Has the seller presented the Release of Contract to them? If so, did the seller fill out the document to give you the entire amount of earnest money?
If the title company has not received the Release of Contract form, tell them you are making a demand for the earnest money to be released to you based on the terms of the contract. They might require to make a written request or they might write up the document for you. The title company is not a party to the contract and is under no obligation to release the money to you or the seller until both you and the seller sign a document stating where the money goes. A few title companies will release the money if one of the parties makes a demand and the second party does not respond within 30 days. If the attorney acted as the escrow agent, this situation might be different than I have described.
If you can answer these questions and provide as much additional information you think is relevant, I can evaluate your answers and see if there is anything else I can suggest.
---------- FOLLOW-UP ----------
QUESTION: Hi, Thanks so much for your reply. I do have a realtor, but the seller does not, however, she does have an attorney. My realtor emailed the attorney the notice to terminate the contract around 7pm on the last day of the contract. We used a title company. They said they can't release unless the seller signs the release. Although I did not make a demand. Yesterday the attorney told my realtor they will sign the release, although, I don't believe that they will do this anytime soon, because of my past dealings w/ them. How long can they drag this process out?
Thanks again for your help!
Leslie
Answer If the title company will absolutely not release the money without everyone signing, they will keep the money for 3 years, at which time it will go to the state.
You can always hire an attorney or attempt to negotiate some type of compromise on the $ amount. For right now, I would just suggest waiting while your REALTOR continues to inquire about their signed copy of the release.
