Buyer didn't show up to settlement. How do we get earnest money? (Fairfax: short sales) - Northern Virginia - Virginia (VA) - City-Data Forum

fasttimes · 08-13-2010, 02:11 PM

A few years ago my parents had a prospective buyer not show up to settlement. All this time their deposit has been held in escrow. A few weeks ago the agent wanted us to release the money so they could give it back to the buyer. The property in question is in Fairfax County.

My folks basically said "no".

What are our options on getting this money?

Margery · 08-13-2010, 02:33 PM

Who is holding the escrow money? Which agent asked them to release the money, the agent for the seller or the buyer? In Northern Virginia when the buyer is in default the deposit may be forfeited as liquidated damages at the option of the seller or the seller may go to court if they do not accept the deposit as full settlement. I believe there is more to this story. Why was this let go on so long?

ny2dc · 08-13-2010, 04:54 PM

what does the contract say?

fasttimes · 08-13-2010, 08:23 PM

Margery,

I believe it is the buyer's agent that is holding the deposit. It is just a hunch but I think they were trying to get the deposit back for their client and might have been a little disingenuous with my folks. As the story is told to me, the agent said they (my folks) would probably have to go to court to get the deposit.

Why did they wait a couple of years? They really didn't need they money and were busy with other things in their life at the time. I guess when they were contacted recenetly they realized they forgot about this.

I'm trying to get my hands on the contract. I'm fairly certain is standard boilerplate for this area however.

Denton56 · 08-13-2010, 10:20 PM

Your parent's never cashed the check? it's their money. The buyer gave it to them, a deposit on the house. Isn't that right?

Margery · 08-14-2010, 06:56 AM

If there are real estate companies involved the deposit is held in escrow, usually the brokerage representing the buyer. It can be held by the brokerage representing the seller, especially in short sales and foreclosures. These are non-interest bearing accounts. Both buyer and seller must agree to the disbursement of the deposit if no settlement occurs. In the case of default by the buyer (and certainly not showing up for settlement is a default) the money goes to the seller. This is clearly spelled out on page 7, paragraph 26 of the regional sales contract. I would suggest calling the managing broker for the buyer's agent first. If the broker refuses to release the money you will need to file an Interplead with the court asking for the money. You may need an attorney for this, I am not sure, you will have to check with your district court. If you do not know a real estate attorney I would suggest calling one of the title companies in the area or one you have used in the past. They all have an attorney on staff who will be very familiar with real estate law.

goozer · 08-14-2010, 08:54 AM

Quote:

Originally Posted by Margery

If there are real estate companies involved the deposit is held in escrow, usually the brokerage representing the buyer. It can be held by the brokerage representing the seller, especially in short sales and foreclosures. These are non-interest bearing accounts. Both buyer and seller must agree to the disbursement of the deposit if no settlement occurs. In the case of default by the buyer (and certainly not showing up for settlement is a default) the money goes to the seller. This is clearly spelled out on page 7, paragraph 26 of the regional sales contract. I would suggest calling the managing broker for the buyer's agent first. If the broker refuses to release the money you will need to file an Interplead with the court asking for the money. You may need an attorney for this, I am not sure, you will have to check with your district court. If you do not know a real estate attorney I would suggest calling one of the title companies in the area or one you have used in the past. They all have an attorney on staff who will be very familiar with real estate law.

This sounds like good advice from someone knowledgeable. I would also add that while I have never been in a default situation like this, I understand that it is somewhat common to negotiate how much of the earnest money the injured party gets to keep (e.g, 50/50 split) to avoid the headaches of using legal process to get all the money. Good luck to you and your parents.