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Ours is one form, referencing not only the termination of the contract, but also the release of EMD (along with whomever would be responsible for any title work costs incurred up to that point)
Thank you kww. This is exactly the form that we completed within the contingency date.
Thank you FalconheadWest.
This is one single form "Mutual Release" saying that both parties agree to vacate the contract, and release Earnest Money Deposit.
We wrote a request and signed the above mentioned single form, within the contingency date.
Of course the contingency will eventually end.
Does "If you're outside your contingency removal date" imply, as long as the seller manages to hold out to the contingency-end date, we would be out of luck? Regardless of the fact that we have initiated the "end" request and form within the date?
This would be scary.
Get your real estate attorney to draft a letter documenting what you are saying in writing, PDQ, it looks like the seller wants to play hardball, did your agent speak to the sellers agent at all to find out why s/he doesnt want to sign ?
Releasing earnest money would be a different addendum than a contract termination addendum. If you're outside your contingency removal date, you probably have no recourse to get your earnest money back. Looks like your agent dropped the ball.
We use the mutual release and it terminates the contract and stipulates what happens with the earnest money.
If they refuse to sign the mutual release, then you are going to have to play hardball and probably talk with an attorney. Of course, on the flip side this seller cannot do anything with that property as long as there is a binding contract on it, so they are kind of shooting themselves in the foot on this one.
And no, as long as you have initiated the document prior to the end of the contingency period you should be fine, from a legal standpoint.
This is one single form "Mutual Release" saying that both parties agree to vacate the contract, and release Earnest Money Deposit.
We wrote a request and signed the above mentioned single form, within the contingency date.
Are you sure that this is the correct form to use to invoke your inspection contingency? Did you submit something in addition to this form? "Wrote a request" does not sound very definitive!
In all of my contracts, if the buyer backs out of the contract due to one of the contingencies in the contract, it simply calls for the Deposit to be returned. It does not require that the Seller "agree" to return the deposit.
Something sounds amiss. You need to get to the bottom of this ASAP.
EDIT: Is your agent a newbie? (Check with his/her broker about this.) Do you have an attorney?
Last edited by jackmichigan; 03-31-2014 at 08:01 AM..
In all of my contracts, if the buyer backs out of the contract due to one of the contingencies in the contract, it simply calls for the Deposit to be returned. It does not require that the Seller "agree" to return the deposit.
This is why I questioned too. When backing out because of a contingency, the form we have in Texas is one sided. Only the buyer needs to sign it. Per the contract, the earnest money automatically goes to the buyer. However, we also do have another form called "Release of Earnest Money." Many agents like to use this form because they are uneducated and don't understand that this is not the correct form to use for the initial inspection period. This is the form to terminate during other contingencies within the contract.
I understand every state does things differently, but something is wrong if a buyer can't formally terminate a contract during their inspection period and have a date on that form that is prior to the expiration. Just because a form is sent prior to a date doesn't mean it's in affect for that date, and those are legal issues ringing some bells...
Thank you.
Yes we do have an inspection contingency, and we wrote (within the contingency date) to say we are not satisfied with the structural condition, and wanted to terminate the contract.
You've said several times that you are not satisfied with the structure, or that you became concerned with structure. Did the inspector point out a structural defect or unsafe condition? What is the basis for your concern, and in what way has that been communicated to the seller?
How the earnest is returned is going to depend on state laws and the contract verbiage.
In our state, and per our contract docs, the earnest money cannot come out of the brokerage's escrow account without a mutual release signed by both parties.
So it may not be anything "amiss", it may just be that is how law dictates it is handled. That is how we have to address it.
As some agents have stated. You either have a contingency, or you do not. If you have a contingency, your offer becomes null and void if you are not satisfied. A good agent would put this in virtually every offer, unless the buyer demanded not to have it, which would be very stupid. The buyer's agent is contractually obligated to work in the buyer's best interest, and so he would not put them at undo risk, unless he was negligent.
Here is how it should go:
"Our inspection showed that there was potentially significant damage to the structural foundation which is roughly estimated at costing 20,000 to fix and could take an unknown length of time depending on market conditions for contractors. If it is not fixed, it could cause serious safety issues with the house. Therefore, we are not approving the results of the inspection and will be executing our contingency clause to terminate based upon our lack of approval of the results. Refund the EMD immediately according to the terms of our contract."
No signature required from the seller. No real choice given to the seller. The EMD should not be in his hands, so the party holding it should release it to you so they do not incur legal liability.
I'm not a realtor, but I do handle real estate investing. If a realtor screwed up the contract and left out my contingency, I would speak to their broker and demand that they reimburse the money because they had been negligent in their duties. This is not a high level task. Expecting a realtor to properly execute a contingency upon inspection clause is equivalent to expecting a waiter to not smash you over the head with your chosen beverage. It is so basic to the job description that you wouldn't think to ask, "Do you plan to assault me with that beverage upon returning, or would you kindly place it upon the table so that I may consume it at my leisure?"
If state law interferes, which it appears it may in some states, it would be wise to ensure that the counter party is legally obligated to agree upon your termination. I haven't encountered it, but I trust LCT to be able to quote the laws in her state. Perhaps there is an additional page you might add to future offers that states if they do not sign the release of earnest money when you opt to use a contingency that after one week they will be assessed a fine of two hundred dollars per day until the earnest money is released.
Get your real estate attorney to draft a letter documenting what you are saying in writing, PDQ, it looks like the seller wants to play hardball, did your agent speak to the sellers agent at all to find out why s/he doesnt want to sign ?
Makes good sense.
Getting quasi legal opinions isn't the same as qualified representation. Always keep a local R/E lawyer in the loop to protect your interests.
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