How can I get my Earnest money back from Seller (Chicago: sales, real estate)
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I was under contract to buy a MLS house in Morton Grove, IL but the deal fell through because bank was taking forever to approve the deal. We waited almost 3 months to hear back from the bank but at the end we cancelled the contract within time period. I signed the cancellation letter and send it to seller's agent thru my agent.
But the sellers agent and sellers of the house still has not signed for the release of my earnest money. How do I get it back? Do I take him to small claims court?
The standard Illinois real estate contracts allow the seller to attempt to secure financing through lenders of their choosing generally at a "not to exceed" type rate that is also gnerally specified in the contract.
Generally a time frame for such financing is up to the seller, but should be specified inn the contract too.
Do you have either if these sections filled out in your contract?
If the seller has been unable / unwilling to do this they have to return your earnest money. You don't need to go to court -- your agent should have already contacted the listing agent and arranged for the earnest money to be returned. It should not be in the possession of the seller. It should be in an escrow account. The listing agent's broker can have sanctions against them if the earnest money is not properly accounted for...
I'd be embarrassed to ask for my earnest money back after stringing the seller along for 3 months. What's the point of earnest money anyway if you can't keep it as compensation for missing a quarter of a year's worth of opportunity to meet potential buyers their actually had their finances in order?
^^^ Don't unfairly jump to conclusions. WE don't know the terms of the contract, or the bank policy regarding loans. We don't know how far the bank is backed up regarding loan processing. It was also started during vacation time. We do not know what type of laan it is. Governent loans are notiously slow to close whether it is VA, Rural or Fanny. And unless you are in the mortgage business in Chicago, we don't know the new banking laws or when they did or will take effect. There is too much we don't know to make wild accusations.
BTW, where were the realtors all this time? They knew what was going on and if they didn't they shouldn't be selling real estate. You can bet one or both know the Loan Officer that generated the mess and was doing the "strining along" In most states the buyer and seller have no contact after the contract is signed until Closing.
What chet said in post number two. If the bank did not approve your financing, without conditions, by the date set on your contract, you are within your legal rights to cancel the contract based on not meeting the contingecies of the contract.
It sounds like the seller might be trying to hold on here and not lose their buyer, if they believe the 'bank' might come through. In which case they should have requested or offered a written extension of the financing contingency, which you may or may not agree to.
Your realtor should be requesting the earnest money be returned and the cancellation of contract signed by the seller, sellers agent and sellers broker. If your agent is not cooperating contact the agents broker. If you have an RE attorney on your contract you may wish to enlist their assistance too. As a former licensed IL RE agent, I would never recommend a buyer or seller enter a contract without a RE attorney. They don't cost much, and are well worth the expense.
^^^ But what is the contingency in this case? Generally speaking -- as a buyer and seller and not as an agent -- my saless were contingent upon my buyer being able to secure financing. I was immediatly notified if they could not and the house went back on the market. Escrow money was . returned to the buyer - minus any monies for inspections the buyer is liable to pay.
In this case the realtor who accespted the escrow money is playing fast and lose with federal and state law. If the realtor released the escrow to the seller he/she has a problem as genearlly speaking excrow is accounted for in the Closing as part of the down payment.
I know knowing about Chicago real estate but I know plenty about the games realtors play. If there has been no answer from the bank in 90 days and no escrow returned something is fishy. This couple needs ti talk to the bank manager and a lawyer ASAP! .
Respectfully shortened. That's the question. The OP didn't indicate what the contingencies were. Mortgage brokers usually give an approval with with contingencies in writing. Some of the contingencies were standard such as having a receipt for prepaid home owners insurance, a certain amount of verifiable funds in a checking or savings account for the down payment and closing costs. Other contingencies included more money down or paying off outstanding debts before the mortgage would be fully approved.
It's really hard to say specifically without knowing the exact terms of the contract and what the mortgage company wrote up for their approval or disapproval of the mortgage.
It's possible the buyer and seller are not agreeing on whether or not the mortgage was actually approved and if any contingencies were standard or not.
If I were not getting satisfied answers from my agent, I would have a copy of my contract, copies of all my paperwork including the earnest money check and receipt. Copies of the paperwork from the bank stating what contingencies were required to approve my loan,or if they denied my loan, and I would take ALL of that, in person, to the broker my agent works under.
If that did not work, I would ask my atty to help, ask for an RE attorney to assist me this late in the game (if one was not hired initially) and I would probably threaten to go over their head to the board if my agents broker couldn't assist me.
While the MLSNI is huge, there are a number of different boards throughout the area. The correct board should be at the top of the buyers contract. IF the buyers agent used one of their contracts versus the sellers offices contracts if the buyers and sellers agents were from two different boards.
Hope that helps explain some things with having little information on the specifics of this particular sales contract.
A buyer or seller can always file a complaint with the local real estate board their RE company is associated with. Most brokers and agents would really prefer not to have problems or complaints filed with the board, so this might be the best avenue for the OP if their agent or agents broker can not resolve the issue.
I have some dealings with boards. They are useless in resolving complaints as only realtors are the arbitrators. No RE Board has standing in any court in America. There are no hard and fast rulse concerning realtors conduct; it is arbitrary. As near as I have been able to tell, the function of the local board is to keep realtors*informed of legal changes and the data concerning sales, etc., updated. Some boards are more serious about complaints and fiduciary responsibility than others.
Buyers and sellers serious about complaints go to the state level and complain to the board that is responsible for licensure. for realtors and banks. Bank presidents cower at the threat of a bank audit. A bank auditor can close a bank without warning.
You're right linicx. A local board may not be succesful in resolving this issue for the OP, if it is still unresolved. And the state licensing board is a good idea as well. My thoughts were along the lines of hoping the mention of going to the board might light a fire under the realtor and brokers behind to get the final details taken care of to cancel the contract and return the earnest money.
Hopefully the OP will come back and let us know if the issue has been resolved or not.
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