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When someone presents a proof of funds letter from a bank, if it's in a business name, I always require the articles of incorporation and a letter saying that the principal is authorized to use those funds for a real estate purchase.
Financing contingent loans require a preapproval letter and a third party financing addendum.
Sounds like your agent dropped the ball.
You may be entitled to the escrow money or you may not be. It all depends on the contract.
You mention all the things the RE agents are saying. What does your lawyer - the one who drew up the contract - say?
You took the home off the market. You removed the tenant. You incurred costs based on the potential buyer's good faith. Based on what you wrote, a properly written and executed contract should entitle you to keep the deposit. Again, it all depends on they terms your lawyer put in the contract.
Not to sound like a Monday morning QB, but when a buyer wants to change a cash offer to a mortgage contingency - after the cash offer has been made and accepted - I would start to become VERY suspect about the deal.
Based on what you wrote, I would also say the RE agent dropped the ball on this one. They came to you as a buyer's agent and misrepresented their client. Even if you weren't able to see through the scam, they should have had some idea what was up.
The bogus bank balance letter amounts to fraud. The buyer should feel lucky to lose only the deposit. You may be able to sue for additional damages.
Speak with your lawyer. Don't communicate AT ALL with the buyer or any real estate agent. Anything you say at this point can only make matters worse. Your lawyer _should_ be able to get all (or at least some) of the deposit. Based on the story as written and every real estate contract I have been involved with, the buyer's agent is full of it when they say he is entitled to the full deposit returned. Again, you specific situation might be different.
I would read your contract. I know our Oregon ones specifically state that the earnest money belongs to the seller for "financial misrepresentation" by the buyer. This seems to be a clear case of that, and yes, my sellers got the earnest money TWICE when the buyers misrepresented their financial status. I'm hoping your contract has a clause like that.
Sounds more like you didn't make a very good deal with regards to performance and contingencies. It still hurts, but you bare some of the blame. If you give someone a financing contingency, a very common practice, then you are opening the door to not being able to keep the earnest money. And yes it is earnest money held in escrow, not escrow money. You could have tightened it up by stating no refunds, or laying out a refund schedule with specific dates and deliverables. Essentially, you can write the contract up for almost anything, making it nearly impossible for a buyer to get their earnest money, but the tighter it gets, the less likely the buyer will agree. In the end, counting on keeping escrow money is generally a bad practice and you should instead focus on making a deal close. Lesson learned.
Can't you sue the guy for fraud? Fraudulently entering into a contract. Impeding whatever....legal language meaning messing up your life, etc.
How old is this greedy sneaky buyer? A kid in his parents' basement?
I found out in the one I was talking about one lawyer for the seller felt it was safer to just wait out the closing date because they then had another buyer in the wings. For one thing, the language in the contract about the seller approving the buyer's form of financing was not really tight on timing and it may have passed. The problem buyer was still delaying signing a release after that date so the seller's lawyer felt it was best to offer her some of her deposit back as an incentive. As soon as she heard that, she signed the release. (Aside from that, the second buyer then jumped in but soon decided he wanted out and then the lawyer suggested the seller threaten a lawsuit so the second buyer relented. And now he's doing very well with the property.)
Seems like the realtor is in league with this guy.
Seems like something like this came up in the past here. Something about the realtor, buyer, lender being in cohoots. Probably a not so uncommon scam.
How about the wording regarding "release of funds"? Is there a definition in your area of release...and how both parties can decide on this?
Can't you sue the guy for fraud? Fraudulently entering into a contract. Impeding whatever....legal language meaning messing up your life, etc.
How old is this greedy sneaky buyer? A kid in his parents' basement?
I found out in the one I was talking about one lawyer for the seller felt it was safer to just wait out the closing date because they then had another buyer in the wings. For one thing, the language in the contract about the seller approving the buyer's form of financing was not really tight on timing and it may have passed. The problem buyer was still delaying signing a release after that date so the seller's lawyer felt it was best to offer her some of her deposit back as an incentive. As soon as she heard that, she signed the release. (Aside from that, the second buyer then jumped in but soon decided he wanted out and then the lawyer suggested the seller threaten a lawsuit so the second buyer relented. And now he's doing very well with the property.)
Seems like the realtor is in league with this guy.
Seems like something like this came up in the past here. Something about the realtor, buyer, lender being in cohoots. Probably a not so uncommon scam.
How about the wording regarding "release of funds"? Is there a definition in your area of release...and how both parties can decide on this?
The guy looks to be in his mid-40's as far as I can tell. And yes, he lives in his parents basement based on his posts on facebook. He has no job and decided to be a "real estate investor". Can we sue him? Possibly and are looking into it, although with no job or home he probably has no money. But it might teach him a lesson.
We do think that we have something solid that we may have found this evening. He claims that he was denied by 3 different private lenders and so wants out of the contract because it states he can cancel if he cannot get financing. However, we believe that he was actually offered financing by at least one of these companies but he backed out of the lending because he did not like the terms of the loan. And the original exact words from the buyers agent in an email was he could not come to terms with the lender. NOT that he was denied lending. Then the agent switched to he was denied lending and his client had every right to his money. We have pressed and pressed for a loan denial letter and he cannot produce one and I am stating to think that he cannot get one because he was never denied lending. We think he walked away from the lenders and that should breach of contract. We are still doing some research on this and hopefully will be able to figure it out 100% soon, but we are all almost positive this is the case.
My agent reached out to his agent this morning in a very long email detailing the reasons we believe we are owed the earnest money and the only response she got back was he would forward her email onto his client and that was the last she heard from him.This is not normal for this guy and he has been in contact with her and very involved from the beginning. So we think he may be backing away from his own client because he now thinks we may be onto something here.
These are all "thoughts" right now, but we did do some pretty heaving investigating today and based on something we found we believe he was never denied lending and that is why he cannot come up with a denial letter. I mean, how does he know he was denied if he never got anything in writing? Not ONE of the 3 lenders who denied you let you know in writing?
My agent reached out to his agent this morning in a very long email
Big mistake. You are way past the point of agents trying to work this out. You have a written and signed contract. Once a contract is signed, the LAWYERS work out any problems. The RE agents (and you) can only complicate matters by inadvertently creating a "revised" agreement via email exchanges/communications that circumvent the attorneys.
You paid your lawyer to write the contract. Now let him/her earn his/her keep by enforcing the terms of the contract. The more you circumvent your attorney, the more you chance messing up your position. Your attorney could give you the correct answer about the deposit money in a few seconds, and resolve the matter in a few days.
At this point, all this "investigative" work you are doing is simply spinning your wheels and wasting your time. It is very likely (assuming your attorney wrote a solid contract) that you can walk away and keep the deposit money - without all the trouble of tracking down the buyer to find out "why" he did it.
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