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

[Anonymous]

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.

Negotiate another addendum in which they pay all of this. It’s not rocket science.

[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.

Really? Seller agent typicallyagreements say they get a % of the EMD?

[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.

These are good points- I assumed the addendum would have said all of this, but that may not be true. Not a real estate attorney, but work in the field and yes have seen addendums with terms like this.

[Anonymous]

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

[Anonymous]

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

Seller’s agent should be advising on this. They will still be getting paid from the proceeds of the sale. And I doubt many have the legal acumen to draft an airtight addendum.

[Anonymous]

Anonymous wrote:In practice sellers rarely will get the EMD. The escrow company cannot release the EMD to you without the buyers’ consent. The buyers, of course, will not consent and will claim they are still working in good faith to make the purchase. Resolving this via litigation will take at least six months, during which you cannot sell the house a different buyer. Most sellers are much better off getting home on the market again as quickly as possible rather than pursuing the EMD.

For this reason, a financing contingency waiver is meaningless for the most part.

This is realtor speak for: I will lose mY commision. Both seller and buyer agents
care only about you closing the deal, not about your best interest. Agents routinely scare clients into closing a deal.

[Anonymous]

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

Sorry about your industry.

OP has a realtor (excuse me: Realtor [TM]) and look how that’s working out!

[Anonymous]

If you really have this issue talk to an attorney - lots of advice here is not correct. Both the terms of your contract, escrow agreement and the underlying law of the jurisdiction in the place where the property is located will determine what happens. Also you may actually have to go to closing even if you know the buyer can't close to prove you were ready to close to get the deposit.

[Anonymous]

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.

[Anonymous]

What happened, OP?

[Anonymous]

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.

Are you kidding? Their realtor will tell them exactly what we are telling OP, and add, "It costs you nothing to decline to sign the release, and it's likely it will allow you to recover the EMD." It's a mortal lock that's what they'll do.

[Anonymous]

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.

[Anonymous]

How can the financing contingency be gone if the seller is having trouble getting the loan?

[Anonymous]

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

[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.

If the contract says they must close by date X and it's now Date X+1 day, yes technically the buyer is in default and seller could choose to take the earnest money and move on.

Personally, I'd ask for a clause to continue showing the home while the buyer gets their shit together. That way you have a backup should the lending not work out. The buyer is obviously having issues.