Advice from RE professionals please - earnest money (vents, state, companies)
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In Indiana, there would be a padlock on the broker's office & they'd be under investigation quicker than you can say ... well, um, let's just say it would be super quick.
Same here, assuming the listing broker was the escrow agent.
Apologies - my use of terminology was incorrect. While I cannot say with certainty where our earnest money was deposited, the check that bounced was from a client trust account. It was NOT from our account - our check cleared without incident. I've never bounced a check in my life.
From what I have researched I cannot see how it can be a "simple screw up" - but again, I come here to be corrected if needs be.
So far, we have been offered no explanation either.
Our check was made out to the listing/selling agency - ie, the same agency whose check bounced.
We've had no communication from them - there's been no apology, no nothing. Except silence. Plenty of silence.
The state real estate commission is aware of this. We've not made a formal complaint as of yet, but they are aware.
I hate, really hate, having to threaten legal action, but as we're at day five and nothing, I'm starting to think we've not been left with much choice.
ETA: Folks, we're not talking vast sums of money here. In fact, it's a rather small amount. The fact that they can't pay out this small amount... well, the word "insolvent" springs to mind.
Last edited by FiveHorses; 04-23-2010 at 09:46 AM..
Reason: added thought
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Trust accounts are sort of sacred. To commingle funds (which is the only way a trust account check might bounce) is definitely grounds for a license revocation. We aren't even allowed to have the bank pay us interest on a trust account in CA.
You wouldn't have to take any legal action, your state RE licensing board will.
Definitely agree with some of the others here. A real estate company in Idaho is not allowed to commingle trust account funds with their normal operating income (or any other money, for that matter). Our account and files get audited about every 18 months to make sure of it.
Commingling funds is among the biggest things a real estate company can do wrong, and can cause the entire office to be shut down and the broker to lose their licence.
However, there is a SMALL possibility this was a mistake. We've had one time that something like this could have happened to us.
Case in point:
We had a client write us a check for $3000. We deposited it in trust upon acceptance. A couple days later, the buyer and seller agreed by addendum to release the EM to the seller as nonrefundable EM. So we wrote a check to the seller. About a week later, we got notice that the BUYER's check they wrote to us bounced. Our check to the seller still cleared because of other client's funds we had in that account. We had to write a check from the real estate account to the trust account to cover the balance until we could square it with the buyer (done at the real estate commission's instructions) However, if we had had to write a bunch of other checks out during that few days between when the check to us bounced and when we found out about it, those checks might have bounced.
So it CAN happen legitimately, it just is super super rare.
Even when you get your money back, you still need to file a claim against listing agent/broker against the Code of Ethics. They have no right depositing money when there is no ratified contract. And to not make sure there are always adequate funds in the account when sending out checks is way wrong. There is probably co-mingling going on, which again, is against the Code of Ethics.
Actually, that's one of our concerns - ie, that it's happening/has happened to others too.
Lacerta - I do appreciate that once every blue moon a weird and wonderful circumstance comes along and the proverbial hits the fan. Fine, fair enough. However, your company made sure it did not happen (transferring funds), so although it might have been a close call... that's all it was.
It's funny.... we're really not difficult people. Had someone from the agency concerned called or emailed or had made some effort to say, "Gosh, look, we're ever so sorry - it was a clerical/accounting/banking error. We're going to put this right tomorrow. " I probably never would have even posted here and just chalked it up to experience.
They have no right depositing money when there is no ratified contract.
Actually, that depends too. Our contracts say "Earnest Money to be deposited in trust account ___ upon receipt or ___ upon acceptance by all parties." So, depending how the contract was filled out, it could be totally correct for EM to be deposited immediately.
I've also overheard clients telling agents in the office that in xxx state that they moved from, it was normal for agents to deposit EM immediately upon receipt. So I think that is regional, and is definitely contract dependent.
Don't get me wrong. I think there is a 99.999% chance the company in question has messed up badly, and should be reported, at least for investigation.
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