Buyer losing an earnest money deposit - how does it work?

[Anonymous]

Anonymous wrote:I’m a real estate attorney. You need an addendum that says

1) the settlement date is changed to xx/xx/2024

2) all contingencies are moved

3). If for any reason whatsoever the purchaser does not complete settlement by xx/xx2024 then the title company is irrevocably instructed and agrees to release the earnest money deposit without further instruction or demand of any kind whatsoever.

4) if for any reasons whatsoever the purchaser does not complete the settlement by xx/xx/2024 then seller shall have no further obligation to sell the property to purchaser and shall have the right to sell the property to a third party without recourse or liability to the seller of any kind whatsoever.

Second, the holder of the deposit must sign a joiner statement agreeing to bound by #3.

Third, your agent is almost definitely legally entitled to half the deposit. You need the agent to in writing release this obligation, usually in exchange for your extending the list agreement.

No title compan is agreeing to clause 3

[Anonymous]

Anonymous wrote:You all make it sound easy to get back the EMD (as the buyer). Yet I know people who have lost it.

Then they are idiots. If you don't sign the release, the title company holds it. It then goes to arbitration which takes a long time. You can then appeal the arbitration which takes even longer. You lose at every step, but until it's final, the house does not have clean title and can't be sold

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is going to go SO WELL for all of you who think you don't need agents! HAHAHAHAHAHAHAHAHAHA!!!!!

+1

Can't wait to start reading the contracts from unrepresented buyers. If they are as clueless as the people on this site, it's going to be fun.

I would never be unrepresented in a RE transaction. That's what a good RE lawyer is for. I'd have mine draft the contract and monitor as needed. No need for agents.

A real estate attorney is great at drafting contracts and addenda but they do not have contacts or relationships that are crucial to getting a deal though. My Realtor got us a deal because she knew the agent on the other side and we were able to get into a house early and write a compelling offer. Sorry but no lawyer is hitting the pavement like that for you.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:A few things to consider: is this your first time selling a house?

you will undoubtedly go to settlement with this buyer before the next buyer who goes under contract, who may also have issues and need an addendum.

The buyer still wants to buy the house, why are you so inpatient? I’m sure the buyer also wants this to be over.

If you terminate the contract because you won’t sign an addendum and the buyer presents you with one, is operating in good faith, and is working as quickly as possible to resolve lender issues, I doubt this qualifies to entitle you to the earnest money deposit. And frankly, it shouldn’t. You’re being a PITA.

+1. You don't get to keep the earnest money because of delays. Don't let your greed cut off your nose despite your face.

What? The EMD is so that the seller knows a buyer isn't wasting the seller's time. A delay is one thing. Multiple delays because the buyer can't get their shit together (while the seller still pays taxes, insurance, homeowner fees, etc) is being a PITA. If you're not ready to buy, then that's fine. Don't waste a seller's time.

A dispute over EMD with the buyer can tie you up in court for months and cause a longer delay. This is fine if you didn’t really need or want to sell and there is no harm in waiting for it to resolve. You might win and get to keep the money. But, if you actually want or need to sell your house, return the EMD and move on to the next buyer right away.

Eh. I doubt a buyer that knows they clearly breached the contract is going to put up much of a fight for the EMD. “Give the EMD back” sounds like realtor bullsh*t.

If the problem is the loan, it’s not likely that the buyer is holding things up. Under those circumstances I’d think the buyer would fight not to lose the earnest money. But OP will see.

No. It’s the buyer’s responsibility to secure financing to close the deal, not the seller. The buyer IS holding things up. They shouldn’t have signed the contract without being sure they would be able to finance.

There are myriad reasons securing financing could be held up that have nothing to do with the buyer. Is it a condo? A coop? The lender will need third party information and if they don't get it, there are delays. Is there a lien on the property or some sort of title defect? This will also hold things up. There's not enough information here to judge what is reasonable. Also, how long have these delays been? Maybe the first addendum was delaying settlement a week, the second one another week and the third a few days. (or even shorter). That's not terribly unreasonable if the situation is out of the buyer's hands. We don;t have enough facts here. It definitely could be the seller being unreasonable or at least impatient.

[Anonymous]

Anonymous wrote:What happened, OP?

We finally closed, property sold.

I cannot for the life of me understand why a buyer would enter a process without having all their ducks in a row. I'm prepared to do my job as a seller (and this was my first time selling). You better be ready to hold up your end when buying.

I know even the buyer's realtor was irritated with the buyer - they were wasting everyone's time (and money). I would bet they haven't even purchased an insurance policy yet.

fyi, this is also me. I left no card, no wine, no chocolates, nothing. Because this buyer didn't deserve another penny of my time.
https://www.dcurbanmom.com/jforum/posts/list/1191920.page

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A few things to consider: is this your first time selling a house?

you will undoubtedly go to settlement with this buyer before the next buyer who goes under contract, who may also have issues and need an addendum.

The buyer still wants to buy the house, why are you so inpatient? I’m sure the buyer also wants this to be over.

If you terminate the contract because you won’t sign an addendum and the buyer presents you with one, is operating in good faith, and is working as quickly as possible to resolve lender issues, I doubt this qualifies to entitle you to the earnest money deposit. And frankly, it shouldn’t. You’re being a PITA.

+1. You don't get to keep the earnest money because of delays. Don't let your greed cut off your nose despite your face.

What? The EMD is so that the seller knows a buyer isn't wasting the seller's time. A delay is one thing. Multiple delays because the buyer can't get their shit together (while the seller still pays taxes, insurance, homeowner fees, etc) is being a PITA. If you're not ready to buy, then that's fine. Don't waste a seller's time.

A dispute over EMD with the buyer can tie you up in court for months and cause a longer delay. This is fine if you didn’t really need or want to sell and there is no harm in waiting for it to resolve. You might win and get to keep the money. But, if you actually want or need to sell your house, return the EMD and move on to the next buyer right away.

Eh. I doubt a buyer that knows they clearly breached the contract is going to put up much of a fight for the EMD. “Give the EMD back” sounds like realtor bullsh*t.

If the problem is the loan, it’s not likely that the buyer is holding things up. Under those circumstances I’d think the buyer would fight not to lose the earnest money. But OP will see.

No. It’s the buyer’s responsibility to secure financing to close the deal, not the seller. The buyer IS holding things up. They shouldn’t have signed the contract without being sure they would be able to finance.

There are myriad reasons securing financing could be held up that have nothing to do with the buyer. Is it a condo? A coop? The lender will need third party information and if they don't get it, there are delays. Is there a lien on the property or some sort of title defect? This will also hold things up. There's not enough information here to judge what is reasonable. Also, how long have these delays been? Maybe the first addendum was delaying settlement a week, the second one another week and the third a few days. (or even shorter). That's not terribly unreasonable if the situation is out of the buyer's hands. We don;t have enough facts here. It definitely could be the seller being unreasonable or at least impatient.

The buyer couldn't get his spending together and have enough personal funds to close. This was 100% buyer's fault. Settlement was delayed an entire month because of buyer's effups.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A few things to consider: is this your first time selling a house?

you will undoubtedly go to settlement with this buyer before the next buyer who goes under contract, who may also have issues and need an addendum.

The buyer still wants to buy the house, why are you so inpatient? I’m sure the buyer also wants this to be over.

If you terminate the contract because you won’t sign an addendum and the buyer presents you with one, is operating in good faith, and is working as quickly as possible to resolve lender issues, I doubt this qualifies to entitle you to the earnest money deposit. And frankly, it shouldn’t. You’re being a PITA.

+1. You don't get to keep the earnest money because of delays. Don't let your greed cut off your nose despite your face.

LOL! That's....not accurate.

[Anonymous]

Anonymous wrote:Even though that is what the contract says, I don't think it actually works that way. We had a similar situation and our realtor said that we wouldn't get to keep their deposit. We moved on and found a new buyer. Not sure if it wasn't worth the hastle for us or our realtor.

+1
It’s a joke actually. We probably could have pursued it further but the legal fees were going to add up, and we couldn’t put it back fully on the market until we released it