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That's insane. We can terminate an agreement here without release of EM. We are like FalconHeadWest that the contract expired so there is nothing to terminate. It is cleaner to get a termination form signed for release of obligation, but they are two separate issues here.
Our Texas contracts spell out exactly what happens to earnest money and how to claim it. It also states that if a party fights for the earnest money when they are in the wrong, according to the contract they signed, the other party is now entitled to 3 times the amount of the earnest money. People don't willy-nilly hold up earnest money in Texas as they don't want to be responsible for 3 times the amount. Defaulting a contract automatically entitles the other party to the earnest money. Simple...
But again, you are NOT in contract if the closing date came and went, so there is NOTHING for the buyer to release. The contract is dead. It's not valid any longer. I would have immediately put it back Active first thing Saturday morning since there is no contract on the property anymore.
You need an attorney. It sounds more to me like you have a buyer defaulting on a contract which can result in a suit for specific performance. In other words, that buyer is toast.
My first question. You took your house off the market without a confirmation letter from the buyer's bank confirming the amount was available and ready to go?
I know an agent who was convinced her buyer was buying with cash, no contingencies. An all cash non-contingent sale. A non- contingent all cash sale. Very proud of that. My realtor friend said, great, let's have that letter and we're set for escrow. What letter? From the bank. Well, it's not in the bank yet, she needs to sell her house first. Then it's contingent. No, it's all cash. Back and forth with the same. Even when the owner of the company got involved the crazy first agent could not understand it.
So you need proof of qualification whether all cash, non-contingent or contingent.
I agree with Falconhead. Do you have any email from these characters?
What horrible rules. So the buyer can hold the seller hostage to get back their earnest money. And the only recourse is to sue them?
Not many buyers realize this so it doesn't happen all the time.
Quote:
Originally Posted by manderly6
As for the OP's situation, I would have an attorney draft a letter demanding the release plus the loss of earnest money or they will get sued for even more money.
Quote:
Originally Posted by FalconheadWest
Our Texas contracts spell out exactly what happens to earnest money and how to claim it. It also states that if a party fights for the earnest money when they are in the wrong, according to the contract they signed, the other party is now entitled to 3 times the amount of the earnest money. People don't willy-nilly hold up earnest money in Texas as they don't want to be responsible for 3 times the amount. Defaulting a contract automatically entitles the other party to the earnest money. Simple...
Every single Purchase & Sale contract I've ever seen here in MA has stated that claiming the deposit is the seller's sole recourse should the buyer default on his obligations. As we use attorneys in this state for every transaction, each contract is unique so I can't guarantee that the OP's contract say this but it's quite likely.
Quote:
Originally Posted by FalconheadWest
But again, you are NOT in contract if the closing date came and went, so there is NOTHING for the buyer to release. The contract is dead. It's not valid any longer. I would have immediately put it back Active first thing Saturday morning since there is no contract on the property anymore.
From a logic standpoint, this absolutely makes sense. If there is no contract then you should be able to put the listing back into active status. Our MLS does have a customer service line that's open seven days a week so if the OP's agent wanted to confirm the rule they could have called at any point.
Quote:
Originally Posted by cully
My first question. You took your house off the market without a confirmation letter from the buyer's bank confirming the amount was available and ready to go?
I know an agent who was convinced her buyer was buying with cash, no contingencies. An all cash non-contingent sale. A non- contingent all cash sale. Very proud of that. My realtor friend said, great, let's have that letter and we're set for escrow. What letter? From the bank. Well, it's not in the bank yet, she needs to sell her house first. Then it's contingent. No, it's all cash. Back and forth with the same. Even when the owner of the company got involved the crazy first agent could not understand it.
So you need proof of qualification whether all cash, non-contingent or contingent.
I agree with Falconhead. Do you have any email from these characters?
Where is your realtor on this!!
I don't believe anyone ever said this was a cash offer. Regardless, I write contracts all the time where the buyer cannot close unless his current home sells but the contract does not include a home sale contingency. In these cases, the buyer is simply taking on the risk that if his home fails to sell then he could lose his deposit money. In our current hotter than heck market, a lot of buyers are putting in offers with no mortgage contingency on them. They still need a mortgage to purchase the property but if they don't get the mortgage they put their deposit at risk. It's actually gotten so bad that our local Realtor board sent out an email about mortgage contingencies advising us not to advise our clients to act in such a manner.
Not many buyers realize this so it doesn't happen all the time.
Every single Purchase & Sale contract I've ever seen here in MA has stated that claiming the deposit is the seller's sole recourse should the buyer default on his obligations. As we use attorneys in this state for every transaction, each contract is unique so I can't guarantee that the OP's contract say this but it's quite likely.
From a logic standpoint, this absolutely makes sense. If there is no contract then you should be able to put the listing back into active status. Our MLS does have a customer service line that's open seven days a week so if the OP's agent wanted to confirm the rule they could have called at any point.
I don't believe anyone ever said this was a cash offer. Regardless, I write contracts all the time where the buyer cannot close unless his current home sells but the contract does not include a home sale contingency. In these cases, the buyer is simply taking on the risk that if his home fails to sell then he could lose his deposit money. In our current hotter than heck market, a lot of buyers are putting in offers with no mortgage contingency on them. They still need a mortgage to purchase the property but if they don't get the mortgage they put their deposit at risk. It's actually gotten so bad that our local Realtor board sent out an email about mortgage contingencies advising us not to advise our clients to act in such a manner.
Well, since you are paid by the buyer you can write such a contract. In the larger scope of things, it's not honorable but, hey, it might be legal if it doesn't violate a code of ethics and if the contract doesn't call for a letter from the bank saying there are funds there when the contract requires no mortgage contingeny.
It is up to the seller's agent to say Where's the money coming from? No appraisal? Why? Oh, now we have a house to sell. Okay, let's let our seller know that, shall we? Lets get that 48-72 hour kick out clause in there.
Only putting the deposit at risk. Is that all you see here? Do you ever represent a seller? What would you say then. Oh, seller, the buyer just put his deposit at risk, get over it. You missed the spring market. You missed how good your spring landscaping made the house show. You missed the time before families like to go on vacation and get ready to move. Now you have to mess up the owner of any house you have a contract on and then that seller's plans are messed up. Oh, well, look...you've got a little deposit.
Doesn't cut it.
On this sale here it was found out just before closing that the buyer needed to sell their home. That statement from a lender a week before closing was probably a ruse, too. Maybe a fake or maybe an "if the buyers sell their house" they can buy. At any rate, house off the market for two months. I wondered on what basis this was done. Even no contingencies, including financing, should require proof of ability to pay. In those areas, hopefully very few, that don't cover this in their home sale contracts, responsible realtors certainly should. My example was to show that even in an area where this is in a contract (as was the area with the airhead realtor I talked about...not that all are airheads as you can tell by my many other posts but that this one was) some realtors don't get it. I don't know where the disconnect is on this OP's contract. But they took the house off the market for two months unaware of the buyer's intentions.
We believe we have a clear claim to the deposit but this really isn't about how good our claim is. It seems like, in Massachusetts, regardless of how clear our case is, we have to sue and the legal fees and court costs come out of the deposit which doesn't seem to make it any type of a remedy for us. Our attorney says that the system in Massachusetts is designed to encourage the deal to get done. It seems like, hypothetically, any buyer can put in offers that are not contingent on the sale of a house, give misleading documents saying that they are all set for the mortgage, and if something goes wrong with the sale of their current house, simply not show up at the last minute and hold the seller's empty house hostage until they get their deposit back or their house sale goes through. The contract clearly states that the buyer would owe the seller the deposit if they default but it seems like in reality this isn't what happens. Can this really be the system? Why should the seller be forced to unknowingly take on the uncompensated risk for the sale of a buyer's current home?
I will have our broker contact MLS. Thank you for the suggestion.
I am the owner not a realtor. When I say that the house was off the market for two months, that means that the realtor did not market the house. Maybe that is the wrong term? I am not sure how long it has been labeled as "pending" and not "active" on mls. I assume that happened after the purchase and sale was signed which was about 6 weeks ago.
YOU need a release from THEM to re-list? What a screwed up rule! In NJ, you would be entitled to retain the escrow deposit plus sue for damages.
Consult with an attorney. Sounds like the buyers are playing games. You need to get your home back on the market ASAP. I doubt the buyers will come through.
We believe we have a clear claim to the deposit but this really isn't about how good our claim is. It seems like, in Massachusetts, regardless of how clear our case is, we have to sue and the legal fees and court costs come out of the deposit which doesn't seem to make it any type of a remedy for us. Our attorney says that the system in Massachusetts is designed to encourage the deal to get done. It seems like, hypothetically, any buyer can put in offers that are not contingent on the sale of a house, give misleading documents saying that they are all set for the mortgage, and if something goes wrong with the sale of their current house, simply not show up at the last minute and hold the seller's empty house hostage until they get their deposit back or their house sale goes through. The contract clearly states that the buyer would owe the seller the deposit if they default but it seems like in reality this isn't what happens. Can this really be the system? Why should the seller be forced to unknowingly take on the uncompensated risk for the sale of a buyer's current home?
I will have our broker contact MLS. Thank you for the suggestion.
I am the owner not a realtor. When I say that the house was off the market for two months, that means that the realtor did not market the house. Maybe that is the wrong term? I am not sure how long it has been labeled as "pending" and not "active" on mls. I assume that happened after the purchase and sale was signed which was about 6 weeks ago.
You can easily do this in the court just above small claims. I've done this. Although many folks will bring their own low budget attorneys, I would think that this is a clear case of breach of contract and any reasonable judge will readily rule in your favor. The clerk of the court will direct you to any needed forms. Also, most of these are online.
Well, since you are paid by the buyer you can write such a contract. In the larger scope of things, it's not honorable but, hey, it might be legal if it doesn't violate a code of ethics and if the contract doesn't call for a letter from the bank saying there are funds there when the contract requires no mortgage contingeny.
You're assuming that I'm hiding the fact that they can't buy without first selling. I never said that. I only said there is no home sale contingency in the contract. These sellers know fully what they are getting into before they sign on the dotted line.
Quote:
Originally Posted by cully
It is up to the seller's agent to say Where's the money coming from? No appraisal? Why? Oh, now we have a house to sell. Okay, let's let our seller know that, shall we? Lets get that 48-72 hour kick out clause in there.
Just like the buyer is responsible for doing due diligence on the house, the seller (and their agent) is responsible for doing due diligence on the buyer. My sellers don't accept offers from strangers. We get well acquainted with their financial situation before we sign anything.
It's pretty rare that I see a kick out clause around here. I know some of these buyers need to sell before they buy but instead they elect to put their deposit at risk.
Quote:
Originally Posted by cully
Only putting the deposit at risk. Is that all you see here? Do you ever represent a seller? What would you say then. Oh, seller, the buyer just put his deposit at risk, get over it. You missed the spring market. You missed how good your spring landscaping made the house show. You missed the time before families like to go on vacation and get ready to move. Now you have to mess up the owner of any house you have a contract on and then that seller's plans are messed up. Oh, well, look...you've got a little deposit.
Doesn't cut it.
Clearly, you're not from Massachusetts. A typical deposit in this state is 5% of the agreed upon purchase price. In my town, the median sale price is over $650K which means the median deposit is about $33K. I think that sum should cover expenses nicely should the buyer default. This of course assumes that the buyer agrees to give up his deposit which we've mentioned in this state does not always happen.
Also, I don't run around putting in offers that I don't think my buyer will be able to carry through on. It's a waste of my time and it's a waste of everyone else's time. Should my client default, it is of no concern to me what happens to the seller. I do not work for them. I don't mean to sound cold or heartless, but it's their agent's job to look out for their interests. I wouldn't be doing a good job for my client were my interests divided as you suggest they be.
Quote:
Originally Posted by cully
On this sale here it was found out just before closing that the buyer needed to sell their home. That statement from a lender a week before closing was probably a ruse, too. Maybe a fake or maybe an "if the buyers sell their house" they can buy. At any rate, house off the market for two months. I wondered on what basis this was done. Even no contingencies, including financing, should require proof of ability to pay. In those areas, hopefully very few, that don't cover this in their home sale contracts, responsible realtors certainly should. My example was to show that even in an area where this is in a contract (as was the area with the airhead realtor I talked about...not that all are airheads as you can tell by my many other posts but that this one was) some realtors don't get it. I don't know where the disconnect is on this OP's contract. But they took the house off the market for two months unaware of the buyer's intentions.
The OP's agent clearly dropped the ball here. I'm sure the buyer provided a pre-approval letter and even if it wasn't noted in the letter a simple phone call to the lender would likely have revealed that the buyer was not qualified unless they sold their current home. The agent should then have fully explained to the OP the possible consequences of accepting an offer where the buyer might not be able to carry through on the contract.
There were contingencies on this contract. It sounds like one of them was a financing contingency. However, the buyer agreed to release that contingency by providing a mortgage commitment letter from their lender. However, they were devious and misleading because according to the OP they did not include all pages of the letter and one page supposedly said that the commitment was contingent upon their home sale. Clearly, the buyer in this case was less than truthful and outright deceptive.
Quote:
Originally Posted by bikerider2013
Thank you for all the replies.
We believe we have a clear claim to the deposit but this really isn't about how good our claim is. It seems like, in Massachusetts, regardless of how clear our case is, we have to sue and the legal fees and court costs come out of the deposit which doesn't seem to make it any type of a remedy for us. Our attorney says that the system in Massachusetts is designed to encourage the deal to get done. It seems like, hypothetically, any buyer can put in offers that are not contingent on the sale of a house, give misleading documents saying that they are all set for the mortgage, and if something goes wrong with the sale of their current house, simply not show up at the last minute and hold the seller's empty house hostage until they get their deposit back or their house sale goes through. The contract clearly states that the buyer would owe the seller the deposit if they default but it seems like in reality this isn't what happens. Can this really be the system? Why should the seller be forced to unknowingly take on the uncompensated risk for the sale of a buyer's current home?
The system definitely stinks, but someone somewhere along the way should have uncovered that this buyer was not as qualified as they stated. IMO, vetting buyers is your agent's job.
Quote:
Originally Posted by bikerider2013
I am the owner not a realtor. When I say that the house was off the market for two months, that means that the realtor did not market the house. Maybe that is the wrong term? I am not sure how long it has been labeled as "pending" and not "active" on mls. I assume that happened after the purchase and sale was signed which was about 6 weeks ago.
According to the rules of MLSPIN (the most commonly used MLS in MA except for in the Berkshires and the Cape & Islands), once an offer to purchase is accepted the listing must be put in "under agreement" (UAG) status unless the seller has given permission in writing to leave the listing in "active" (ACT) status. Should the listing be left in ACT status, it will be flagged to indicate that an offer has been accepted and the reason it is being left in ACT status is noted. Once the Purchase & Sale contract is signed, the listing should be moved to UAG status again unless written permission is received from the seller to leave the property in ACT "flagged" status. MLSPIN actually just did away with the ACT "flagged" status a couple of weeks ago and all listings in the ACT "flagged" status have been converted to UAG listings.
Quote:
Originally Posted by Species 8472
You can easily do this in the court just above small claims. I've done this. Although many folks will bring their own low budget attorneys, I would think that this is a clear case of breach of contract and any reasonable judge will readily rule in your favor. The clerk of the court will direct you to any needed forms. Also, most of these are online.
I believe the cut off for small claims court in MA is $7K. Even on a $300K home (very low price point for anything anywhere near Boston) the deposit is going to be $15K.
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