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If ... they get to keep your earnest money, I doubt they'll sue. ... That's what the earnest money is for.
This is a great lesson for people though. And Kev, I agree with you. That's what earnest money is for. It should be calculated to reimburse the seller if the buyer walks the contract. Unfortunately, in Texas at least, 99.9% of the people involved in residential transactions don't understand that.
In fact, the form contracts that all agents here use include not only specific performance as a seller remedy, but damages too. It's insane! Keeping the earnest money should be the only remedy for a seller, and the buyer should have specific performance rights, but no right to sue for damages. But try to change the form contract to make it "right," and both agents will act like you're trying to use white out on the ten commandments.
This is a great lesson for people though. And Kev, I agree with you. That's what earnest money is for. It should be calculated to reimburse the seller if the buyer walks the contract. Unfortunately, in Texas at least, 99.9% of the people involved in residential transactions don't understand that.
In fact, the form contracts that all agents here use include not only specific performance as a seller remedy, but damages too. It's insane! Keeping the earnest money should be the only remedy for a seller, and the buyer should have specific performance rights, but no right to sue for damages. But try to change the form contract to make it "right," and both agents will act like you're trying to use white out on the ten commandments.
That's interesting. In our contracts, it is clear that the seller's "sole remedy against the buyer for failure to close the transaction" is the earnest money. That's it.
Buyer's don't give up their "legal remedies" so they can sue for performance.
That's interesting. In our contracts, it is clear that the seller's "sole remedy against the buyer for failure to close the transaction" is the earnest money. That's it.
Buyer's don't give up their "legal remedies" so they can sue for performance.
Yeah, that's the way it should be. I'd be curious to see if that results in higher earnest money deposits in Oregon. What would you say is the norm for a $200,000 home? In Texas, I think that with a typical 30-45 day closing it would be between $1,000 and $3,000. But I'll defer to agents who see a lot more deals than I do.
But even with your Oregon forms, I believe that giving the buyer the right to sue for damages is asking for trouble. Especially in a market fluctuating as much as ours has this decade, trying to determine exactly what a buyer's damages are if the seller refuses to sell their home would be extremely difficult. But that one is certainly debatable. Giving the seller the right of specific performance is not, in my opinion.
But maybe some of the Texas agents who defend their form contracts as being great documents (hello TexasHorseLady) can explain why it's a good idea for a seller to have the right to sue a buyer for damages or for specific performance when earnest money is there for liquidated damages.
First of all, dear friends, when I thought to buy a house I had lot of money in stocks. The stock went down, I had my shares invested in finance and tech center. Some of my shares dropped to .006 cents. Is it my fault, no.
My company announced job cut on 17th Oct, is it my fault, No.
I had a real estate agent, he lied with me that I can come out of deal by only loosing my earnest money.
Yes, I did a mistake that I should not have trust him and read the papers carefully. I am a first time home buyer and I am a foreigner.
Now, all the time they keep threatening me that they will sue me.
Now, offcourse the lender is facing problem to get my loan approval. But still they are doing by hook and crook.
That is why I asked where to seek help and complained against this.
Attorney charges fees is on hourly basis though I am going to see attorney today.
First of all, dear friends, when I thought to buy a house I had lot of money in stocks. The stock went down, I had my shares invested in finance and tech center. Some of my shares dropped to .006 cents. Is it my fault, no.
My company announced job cut on 17th Oct, is it my fault, No.
I had a real estate agent, he lied with me that I can come out of deal by only loosing my earnest money.
Yes, I did a mistake that I should not have trust him and read the papers carefully. I am a first time home buyer and I am a foreigner.
Now, all the time they keep threatening me that they will sue me.
Now, offcourse the lender is facing problem to get my loan approval. But still they are doing by hook and crook.
That is why I asked where to seek help and complained against this.
Attorney charges fees is on hourly basis though I am going to see attorney today.
Thank you for all your responses.
I have sympathy for you. But there is a lesson in self-responsibility in your situation. If you had money in stocks that you intended to use to fund the purchase of your home, that was very irresponsible. One thing about America is that there is a great responsibility on each person to look out for themselves. Having said that, no one can be an expert at everything, so when you get dishonest advice from someone you are paying to give you advice, it is understandable to be angry.
I hope you come out on the other side of these tough times stronger and smarter.
Also, in Texas, if the party the defaults on the earnest money doesn't release it to the other party, you can go after them for 3x the amount. It's something that would probably go to mediation and then court first. Just a little more info.
In my state, it is an option for the non-breaching party to sue for specific performance. It is very rare because of the time and legal costs involved, but our contracts do allow for it. Most simply take the breaching party's earnest money and walk away. The #1 thing the OP needs to do is talk to a good r.e. attorney. Scare tactics from the builder deserve scare tactics back at them from an atty.
In this particular situation, if the OP truly cannot qualify for a loan, then he needs to find a new lender ASAP. The new lender will not qualify him and he should be able to cancel the contract if it has the standard clause allowing for cancellation due to inability to obtain financing. The problem I see (reading between the lines) is that the OP maybe does qualify and has gotten cold feet because of the current state of the economy. In which case he still needs to be talking with that attorney.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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I found out the hard way about having funds to close in a stock market account. It's really good advice to turn stocks into cash at the time one makes an offer as I'm sure Virgo has found out as well.
In CA, the earnest money is generally agreed to be liquidated damages for a breach by the buyer. One of the many reasons I'm glad I practice this profession here.
I have shouted a lot, but that is not helping. All the time they keep pushing me that I am doing breach of contract if I am not cooperating with them. Today I talked to lawyer and she said that the real estate agent has got the worst contract signed from me. As it has a clause that the seller can sue for damages for specific performance.
Though they are trying hard, but my loan is not yet approved by their underwriter. The closing date is coming closer. However, they keep asking me this and that paper just to push it hard to get approval so that they can sell me house.
Today I talked to lawyer and she said that the real estate agent has got the worst contract signed from me. As it has a clause that the seller can sue for damages for specific performance.
This is very common because agents are not paid to protect you from such things. I'm going to guess that your agent did not point this provision out to you and suggest that you change it. Your attorney is exactly correct that your contract is terrible if it allows you to be sued for damages and for specific performance. I'm also going to guess that your agent said you didn't need a lawyer when you signed the contract.
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