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Old 09-16-2011, 08:56 PM
 
7 posts, read 11,798 times
Reputation: 10

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The short version of this is whether it is normal for earnest money to be cashed in California after approval of a 1st but prior to approval of a 2nd.

Have been waiting on a short sale for about five months. House has two liens on it. Our agent took an earnest money check five months ago but did not cash it. We got the approval from the 1st but not the 2nd, back in August. The first title company went out of business. The agent asked me for a new check to the new company. The agent/title company cashed the 1st check but we still do not have approval from the second lender.

I am wondering if this is normal or appropriate in California markets. We've blown through pretty much every schedule and deadline offered to me. I am wondering what the appropriate response is at this point. Does the title company have a right to my money right now? Should the agent have passed it along? What should I request?
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Old 09-16-2011, 09:18 PM
 
7 posts, read 11,798 times
Reputation: 10
Looking over the addendum, it would seem I have the answer. Please tell me if you concur with my assessment that this action violates our contract:

Addendum item #3:
3. BUYER'S DEPOSIT CHECK. Buyer's deposit check shall be delivered in escrow within:
(i) 3 business Days after Seller delivers to Buyer Short Sale Lenders' Consent Satisfying 1B...

item 1B reads as follows:
B. Short Sale Lender' Consent means that all Short Sale Lenders shall collectively agree to reduce their respective loan balances by an amount sufficient to permit the proceeds from the sale of the Property to pay the existing balances on loans secured by the Property, real property taxes, brokerage commission, closing costs, and other monetary obligations the Agreement requires the Seller to pay at Close Of Escrow (including, but not limited to, escrow charges, title charges, documentary transfer taxes, prorations, retrofit costs, Homeowners Association Fees and Repairs) without requiring Seller to place any funds into escrow or have any continuing obligation to Short Sale Lenders.

My reading of this is that no, my agent should not have passed my earnest money to the title company without the approval of the second. Do you concur? If so, how should I go about getting my money back in the interim?
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Old 09-16-2011, 09:53 PM
 
Location: El Dorado Hills, CA
3,724 posts, read 9,220,648 times
Reputation: 3896
Bring the contract to your agent and discuss it with him. I'm surprised he delivered the check to escrow if that's not the process agreed to in the contract. If the escrow company cashed your check and then went out of business, it might be difficult for you to retrieve your money. But there are regulations on how escrow money is handled and it might be in a trust account waiting for instructions, or forwarded to another company that bought them out.
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Old 09-16-2011, 10:54 PM
 
7 posts, read 11,798 times
Reputation: 10
The agent actually asked for a replacement check since the first title company went out business, and *then* she forwarded the check to the new title company, which cashed it. I called her on it and she said that she did that because we had the first acceptance and that the second was coming "real soon now." That was weeks ago. The contract indicates a different procedure.

Is this irregular? How can I get my money back from the Title company in the interim? I've asked my agent to do it but frankly I'd like to be able to make the request independent of her schedule.
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Old 09-17-2011, 09:14 AM
 
Location: El Dorado Hills, CA
3,724 posts, read 9,220,648 times
Reputation: 3896
Call the agent's broker if your agent doesn't help you on this. If your Short Sale Addendum specified that you need lender approval before cashing the deposit check, she should not have sent it to the title company.
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