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Curious as to other agents opinions on the following situation:
>Buyers agent presents an offer for a vacant lot that buyer has not seen.
>Offer is accepted.
>Another solid offer arrives early the next morning, but is 'rejected' because Seller's agent believes escrow is being opened that day.
>Contract states that Buyer's agent will deposit earnest money into escrow the next business day after acceptance.
>Eight days later, no open escrow, no deposit check. Buyer's agent says the client wants to inspect the lot per the contingency clause before depositing any money.
>No other offers have come in during this period.
Would you try to work with this situation? Any thoughts as to whether this qualifies as "failure of consideration" in legal terms?
(Thankfully, this is not my contract--but I'm curious to hear responses to see if they are the same as what mine was to the agent who is dealing with this! )
I have to look to the contract for the answer: IF the contract provides that escrow will be opened the next business day after acceptance, and was not, then, according to your description, the buyer is in breach of contract and is subject to whatever cancellation provisions are provided for in the contract and/or allowed by law in your state.
FYI: In Arizona, we have a "curious" little provision in our contracts: It is called a "Cure Notice" - if either party fails to perform any part of the agreement, in any way, the party not in breach can issue a cure notice which gives the party in breach 3 days to "cure" the breach. If they do not cure the breach, the non breaching party MAY immediately cancel the contract.
In the Deposit Receipt section of our contract the only option given is:
[ ] B-1 The initial deposit check shall remain uncashed, shall be retained by the Brokerage Firm assisting the Buyer, and shall be deposited with Escrow or in a trust fund account by the next business day after the Acceptance Date.
I haven't actually seen this contract, but will assume for the sake of discussion that the Buyer's agent checked this option, as it is the only one there. His only other choice is to put an "NA in the box for "Not Applicable" and I'm sure the Seller's agent would have had a problem with that! (The next "fill in the box" section deals with the interest on the deposit and it is a "choose one or the other" option. )
Thanks, Greatday for the response. We've just updated our Purchase Contract (from an older version called the "DROA"--Deposit Receipt, Offer and Acceptance). There are new and revised provisions that we are still getting used to. I like the AZ "Cure Notice" language.
Last edited by cynmkolohe; 08-28-2007 at 11:18 PM..
In the Deposit Receipt section of our contract the only option given is:
[ ] B-1 The initial deposit check shall remain uncashed, shall be retained by the Brokerage Firm assisting the Buyer, and shall be deposited with Escrow or in a trust fund account by the next business day after the Acceptance Date.
I haven't actually seen this contract, but will assume for the sake of discussion that the Buyer's agent checked this option, as it is the only one there. His only other choice is to put an "NA in the box for "Not Applicable" and I'm sure the Seller's agent would have had a problem with that! (The next "fill in the box" section deals with the interest on the deposit and it is a "choose one or the other" option. )
Thanks, Greatday for the response. We've just update our Purchase Contract (from an older version called the "DROA"--Deposit Receipt, Offer and Acceptance). There are new and updated provisions that we are still getting used to. I like the AZ "Cure Notice" language.
From what you wrote, and again, Hawaii law is different , it would appear the buyer is in breach and the seller should be able to take action to rescind.
BTW, anyone talk with the buyers agent about WHY the check was not deposited? I did a quick check of your law and it would seem to me that the Buyers agent is risking their career
BTW, anyone talk with the buyers agent about WHY the check was not deposited? I did a quick check of your law and it would seem to me that the Buyers agent is risking their career -
The Seller's agent is a friend of mine from another office, so I don't have full details...I'm under the impression that he just didn't return calls for a few days and the escrow company had no communication with him either and now he seems to think that he can wait until the potential buyer inspects the lot.
I think the last action she took was to tell him that he has to have the money deposited by 2:00pm tomorrow.
The underlying question for me is more about the legality of the contract since "consideration" is required. The Seller's only evidence that there is any consideration is that the buyer's agent signed the receipt for it in the contract. Since the deposit was not made into the escrow account as required by the contract is this "failure of consideration"? Or is there "consideration" if the buyer's agent is making a very big mistake by keeping the check in his office? (Or something worse if he has signed for a check he never actually received?)
The Seller's agent is a friend of mine from another office, so I don't have full details...I'm under the impression that he just didn't return calls for a few days and the escrow company had no communication with him either and now he seems to think that he can wait until the potential buyer inspects the lot.
I think the last action she took was to tell him that he has to have the money deposited by 2:00pm tomorrow.
The underlying question for me is more about the legality of the contract since "consideration" is required. The Seller's only evidence that there is any consideration is that the buyer's agent signed the receipt for it in the contract. Since the deposit was not made into the escrow account as required by the contract is this "failure of consideration"? Or is there "consideration" if the buyer's agent is making a very big mistake by keeping the check in his office? (Or something worse if he has signed for a check he never actually received?)
I think you've hit the nail on the head. There's a flaky buyer in this deal and the buyer's agent is trying to stall through the inspection period thinking that the contract will fall apart at that point, and the elusive earnest money deposit will be a moot point.
At this point, the buyer (and by extension, his agent) are in breach of the contract and the seller could cancel this contract. However I think notice of the cancellation would probably have to be given prior to entering into a new contract.
So I'm a little hazy here, escrow has NOT been opened and no earnest money deposited? If that's the case, it sounds like the buyer's agent is in a heap of trouble! Or at least they would be here in AZ.
I would hope the buyer's agent would just "come clean" on this whole deal, and elicit some sympathy from the seller's agent and maybe they can work together along with their brokers to get this thing resolved. It would be sad to see this buyer get away with this. Any input as to whether this buyer's agent is a good agent that's a victim of this buyer, or whether this agent is party to this whole mess?
I am having a similar problem We accepted a purchase contract. The buyers agent was supposed to open escrow (Arizona). She did not do that. Three days later she lets my agent know that due to "court issues" the buyer can not proceed. We accepted contract on the 13th of Dec and the buyer wanted to close by the 22nd of Dec (cash deal) and is now backing out. The whole thing sounds fish to me now. Then I find out the the buyers agent only made a copy of the earnest money, money order and let the buyer leave with it. She did not keep it to open escrow. Anyone have a similar problem like this. If so what was the outcome. To me it sounds like the buyers agent did not properly do her job.
As with the above, what does your contract say? In Texas, there is no time frame as to when to open escrow. You're just supposed to do it as quickly as possible. That could be same day, or it could be 3 days later, 4 days, whatever the situation is. It's not co-mingling of funds if the agent doesn't have the money in her hand, so I don't really see anything "wrong" unless your contract states otherwise.
I am having a similar problem We accepted a purchase contract. The buyers agent was supposed to open escrow (Arizona). She did not do that. Three days later she lets my agent know that due to "court issues" the buyer can not proceed. We accepted contract on the 13th of Dec and the buyer wanted to close by the 22nd of Dec (cash deal) and is now backing out. The whole thing sounds fish to me now. Then I find out the the buyers agent only made a copy of the earnest money, money order and let the buyer leave with it. She did not keep it to open escrow. Anyone have a similar problem like this. If so what was the outcome. To me it sounds like the buyers agent did not properly do her job.
Do you have your own agent? Your agent should be able to address your concerns.
Assuming you used the standard Arizona Realtor purchase contract with no modifications, then the earnest money is to be deposited "upon acceptance" of the offer. This is normally interpreted to mean within one business day of acceptance. If this was not done, then your agent should have issued a "cure notice" per the contract giving them 3 days to follow through. If they still do not, then you have the option to cancel.
In any case, it appears whether or not the deposit was made is moot if the buyer canceled. Although "court issues" is not by itself a valid cancellation reason, they are likely still within their inspection period where they can cancel for any reason and retain the earnest money.
We use the Notice of Buyer to Perform which gives 2 days to perform or the seller can cancel. Sounds like a call from the listing agent to the buyers agent broker is in order.
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, it would appear the buyer is in breach and the seller should be able to take action to rescind.
Or at least they would be here in AZ.
