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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.
Best advice yet in this thread.
If this guy is unemployed, it may be worth your while to have your lawyer send a strongly worded letter stating your intent to sue if he continues to challenge your claim on the escrow money. It sounds to me like he doesn't have the scratch to afford what could be a costly lawsuit and may decide it best to simply cut his losses.
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.
At this point since you've found out that he did get financing and turned it down, you can sue for Specific Performance and force him to buy the home.
I lend in all 50 states and the majority of the contracts I see are drawn up by Realtors, using a pre-written contract their local BoR provides them. Actually, even in some of the attorney states, the Realtors write them up and the buyer takes it into their attorney for review.
Most states (I would like to think all, but can't say that) you cannot release the earnest money without a mutual release, signed by all parties. (Why divorces make for ugly transactions). But you also won't be able to re-market your home for sale without the release. Lots of things to consider. You should get every dime of the $2000, but could of/should of is a bitter taste. Your Realtor could have done a bit more to protect you, but that also falls into the could of/should of mindset.
I lend in all 50 states and the majority of the contracts I see are drawn up by Realtors, using a pre-written contract their local BoR provides them. Actually, even in some of the attorney states, the Realtors write them up and the buyer takes it into their attorney for review.
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The Florida Farbar is written by a team of attorneys.
There is no way in hell I would use a contract written by other agents.
The Florida Farbar is written by a team of attorneys.
There is no way in hell I would use a contract written by other agents.
We are agents, not attorneys.
Attorneys most certainly drew up the contracts for the various Board of Realtors I speak of, one, NVAR has 20K members........but the attorneys do not fill in the blanks. Are you saying in Florida an attorney writes up their own contract and each different within the same BoR?
At this point since you've found out that he did get financing and turned it down, you can sue for Specific Performance and force him to buy the home.
Going this route, is the stupid way to go. It will take one to two years to get such a suite settled, and not go the way the seller wants. During that time frame, the seller could have sold the property to another party, and the delay to get through the court procedures may end up costing a lot more than the seller wants to give. And it may come down to even though the buyer is required to buy, there may not be any financing available to make it happen after the law suite and the buyer is ordered to buy.
No intelligent seller owning a low priced income property such as the one involved between the OP and buyer, would fool around going to court to force the closing. It would be expensive to do so, and it makes a lot more sense to just sell it to another buyer, which should not be too difficult if the property makes good investment sense.
And you don't know the requirements to get the loan he rejected. The terms, etc., may have been such that no court would require a seller to accept and buy the property and would rule the buyer was justified in rejecting the proposed loan.
Getting a mortgage on an investment rental, is different than getting a loan on a personal residence. I know as I was a investment broker working only with my stable of clients buying, selling, and exchanging property for them for many, many years. In all those years, I only had one sale not close working as a buyers agent, or sellers agent, and that was due to a fraud being pulled by the seller that I was able to discover. And we turned down quite a few loans over the years, as they would not be reasonable to take on one of them due to some factor involved.
We can only assume as of this time the sale is dead. The only question is, who should get the deposit. The only real answer is in the purchase document itself. As we are not aware of the wording of the purchase contract, none of us can give an educated opinion of who legally gets the deposit. Until that question (problem) is solved, the seller has a problem. They cannot put the property back on the market, until this problem goes away, because the property is under contract.
The seller needs to get a Real Estate Attorney involved, and get their opinion if it is even worth pursuing fighting to get the deposit. If the seller goes after those funds, it can easily cost more than the amount of the earnest money deposit to get them released to the seller. If the seller loses as the judge rules the buyer was justified in refusing the offered loan, then the buyer gets the escrow funds, and in such a case the judge will rule in the buyers favor, and the seller is out all the costs to sue to get the escrow funds.
I get what you're saying, but the kinds of amendments used in the typical sale aren't full of legalese- I.e., the "standard" contract includes the drapes, but the seller is keeping the drapes in the master bedroom, etc. as for "riders", in my area nearly all of those are standardized too - seller renting back the property for a week after closing, etc. you (and your attorney) are not likely to be the first people ever who wanted to sell with a particular condition.
in any case, the board re-writes & polishes the contract (and the riders) constantly, based on anything that causes litigation in our area. Further, the number 1 consideration for preventing lawsuits is the "meeting of the minds" - the discussions that happen between the agents/buyers/sellers before those amendments/riders are crafted. The contract just memorializes the understanding of the parties.
A "standard" deal puts 2 agents & buyer & seller (4 parties) on the same page - adding two more attorneys as parties isn't going to simplify anything or *improve* communications between the principals (who are the only people who should really matter in a deal).
I see where you are coming from and it makes sense. I guess it is a matter or perspective and personal experience.
In my area, I wouldn't trust a RE agent to do anything related to the contract. I have dealt with many agents, both good and bad. They simply aren't the people you want working with a legal form.
I completely understand the "meeting of the minds" concept and that is what the buyers and/or agents do. Come to terms on the agreement. However, once that contract is signed, it is the only instrument governing the deal. If it is not in the contract, or improperly worded, or (to use your example) the wrong amendment is selected for that particular item, it is too bad for someone. Lawyer-speak is an entirely different language that most people aren't able to decipher. I agree the attorneys don't "improve" communication between the parties, but they are in the best position to make sure the agreement is properly and fully memorized on paper.
Even attorneys who don't specialize in real estate can get it wrong. A few months ago I closed on a house. The seller decided to use a "friend" as his attorney. A good attorney, just one that didn't normally work in real estate. All standard contract forms were used, with standard cross outs made and standard amendments/riders added. In reviewing the contract with my lawyer, we noticed a few items that weren't part of the "meeting of the minds"... all very much in my favor. I could have easily taken advantage of the situation (I didn't - we re-wrote those sections and pointed out the mistakes to the other lawyer).
I also recently helped a relative on a short-term rental contract in another country. Over there, they also use standard forms and no lawyers. I found a local lawyer to review... good thing, since some of the "blanks" were not filled out correctly. Honest mistake, but one that could have cost me if I signed without a full understanding.
I'm guessing (and hoping) that RE agents are much better trained in the areas where attorney contract review is not common. Obviously it works out for most situations.
Again, I would never sign a contract (purchase, sale, rental, lease - real estate or not) without reading and fully understanding everything in there. Every time I lease a car, it drives the dealership crazy that I insist on reading the contract. As a home sale/purchase is orders of magnitude more expensive, I would expect a professional to explain the entire thing to me. If it was an area where lawyers were not commonly used, then it would fall to the _trained_ RE agent to explain what I didn't understand. If they were unable to explain the contract, I would probably find a new agent. In the end, it is YOUR money/home and thus your responsibility to understand what you are signing and that it reflects the terms you believe you agreed to. Whether a lawyer, agent or your brother Bob explains it doesn't matter as much as you having an accurate understanding.
In re-reading this story, I also noticed something I missed. There is only $2,000 in escrow? That's less than 1% of the sale price. Is it common in that area to have such a small deposit with the contract? Around here, 10% on signing is the norm - any less and the seller would likely walk away.
At $2,000, it almost isn't worth the fight. You might be better off in small claims court than paying a lawyer.
Going this route, is the stupid way to go. It will take one to two years to get such a suite settled, and not go the way the seller wants. During that time frame, the seller could have sold the property to another party, and the delay to get through the court procedures may end up costing a lot more than the seller wants to give. And it may come down to even though the buyer is required to buy, there may not be any financing available to make it happen after the law suite and the buyer is ordered to buy.
I have seen it happen in just over a month in a case just like this. Buyer backed for no reason after getting loan approval. After a dispute that went on for a month or so the seller got the thousand dollars earnest money. You don't know how long it will be, but it is doubtful it would be years. What makes you think this? Have you seen cases where it did?
I have seen it happen in just over a month in a case just like this. Buyer backed for no reason after getting loan approval. After a dispute that went on for a month or so the seller got the thousand dollars earnest money. You don't know how long it will be, but it is doubtful it would be years. What makes you think this? Have you seen cases where it did?
It's very clear that oldtrader was not referring to getting the deposit--he was referring to a lawsuit for Specific Performance. Big difference.
Going this route, is the stupid way to go. It will take one to two years to get such a suite settled, and not go the way the seller wants. During that time frame, the seller could have sold the property to another party, and the delay to get through the court procedures may end up costing a lot more than the seller wants to give. And it may come down to even though the buyer is required to buy, there may not be any financing available to make it happen after the law suite and the buyer is ordered to buy.
No intelligent seller owning a low priced income property such as the one involved between the OP and buyer, would fool around going to court to force the closing. It would be expensive to do so, and it makes a lot more sense to just sell it to another buyer, which should not be too difficult if the property makes good investment sense.
And you don't know the requirements to get the loan he rejected. The terms, etc., may have been such that no court would require a seller to accept and buy the property and would rule the buyer was justified in rejecting the proposed loan.
Getting a mortgage on an investment rental, is different than getting a loan on a personal residence. I know as I was a investment broker working only with my stable of clients buying, selling, and exchanging property for them for many, many years. In all those years, I only had one sale not close working as a buyers agent, or sellers agent, and that was due to a fraud being pulled by the seller that I was able to discover. And we turned down quite a few loans over the years, as they would not be reasonable to take on one of them due to some factor involved.
We can only assume as of this time the sale is dead. The only question is, who should get the deposit. The only real answer is in the purchase document itself. As we are not aware of the wording of the purchase contract, none of us can give an educated opinion of who legally gets the deposit. Until that question (problem) is solved, the seller has a problem. They cannot put the property back on the market, until this problem goes away, because the property is under contract.
The seller needs to get a Real Estate Attorney involved, and get their opinion if it is even worth pursuing fighting to get the deposit. If the seller goes after those funds, it can easily cost more than the amount of the earnest money deposit to get them released to the seller. If the seller loses as the judge rules the buyer was justified in refusing the offered loan, then the buyer gets the escrow funds, and in such a case the judge will rule in the buyers favor, and the seller is out all the costs to sue to get the escrow funds.
You missed the most important part of this deal - the "buyer" signed a purchase contract & then began immediately trying to "flip" the property to a greater fool. There was no intent to perform, unless he could find someone else willing to buy it from him at a greater price. He lied about his ability to purchase the property & mislead the seller about his intentions. If he had told the truth about what he planned to do, the seller would have never evicted their tenant & pulled the property off the market. There's real live fraud here & if you could get the feebs interested, a possibility of jail time for the "buyer". Proving real economic damage here wouldn't be that hard, collecting a judgement would be hard.
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In the end, it is YOUR money/home and thus your responsibility to understand what you are signing and that it reflects the terms you believe you agreed to. Whether a lawyer, agent or your brother Bob explains it doesn't matter as much as you having an accurate understanding. 
