Title company won't give my $20,000 EMD back

22 Replies

I had a property under contract in August 2014. After doing inspections, I realized the scope of repairs was too great so I decided not to proceed. 

The selling agent told me it was no problems and sent me the cancellation form and told me I would get my $20,000 back within a week or 2. 

2 weeks passed with no money so I called him and he told me I needed to contact the title agency directly. I have been calling and emailing them consistently for months. I keep getting shifted around from person to person. Each one says 'I will follow this up and get back to you immediately', which of course they never do.

It is now beyond frustrating. Does anyone know how I can get the 20K back without further nonsense?

I think the Florida Department of Business and Professional Regulation should get involved. Um, did you say "dong inspections?"

Originally posted by @Joseph Ball :

I think the Florida Department of Business and Professional Regulation should get involved. Um, did you say "dong inspections?"

 Thank you for your suggestion and for pointing out the typo!

I really hate to tell you this but I've been on the other end of earnest money transaction and the state kept the earnest money, I live in Texas and it might be different in different states but basicly what happened was I had a wholesaler tie up my property I was selling for about 6 months during that time I couldn't sell to anybody else and at the end of 6 months I told him enough was enough and the contract was expiring and he didn't make it to the closing table after a week or two I contacted the title company and ask for the earnest money for the anguish I had suffered they told me earnest money goes into a state fund, the wholesaler sent me a form to sign to release it back to him but I didn't sign it because I made house payments for 6 months without rent coming in or not having the ability to sell to anyone else. So to me earnest money is not what it is suppose to be. not sure what happened to it but I think the state got it? Not quite sure what all the rules are on earnest money but I would think if who ever is buying the house does not have a good excuse for not buying, doesn't close, the seller should get the money by the same token if the buyer has a good excuse they should get their money back, could not get fiancing, found by inspection it would cost more to repair than they thought, ect.

DBPR is going to be the slowest route to resolution.  Hire local counsel and let them deal with it.

Originally posted by @Allen Denham :

I really hate to tell you this but I've been on the other end of earnest money transaction and the state kept the earnest money, I live in Texas and it might be different in different states but basicly what happened was I had a wholesaler tie up my property I was selling for about 6 months during that time I couldn't sell to anybody else and at the end of 6 months I told him enough was enough and the contract was expiring and he didn't make it to the closing table after a week or two I contacted the title company and ask for the earnest money for the anguish I had suffered they told me earnest money goes into a state fund, the wholesaler sent me a form to sign to release it back to him but I didn't sign it because I made house payments for 6 months without rent coming in or not having the ability to sell to anyone else. So to me earnest money is not what it is suppose to be. not sure what happened to it but I think the state got it? Not quite sure what all the rules are on earnest money but I would think if who ever is buying the house does not have a good excuse for not buying, doesn't close, the seller should get the money by the same token if the buyer has a good excuse they should get their money back, could not get fiancing, found by inspection it would cost more to repair than they thought, ect.

 Allen,

I was definitely not one of those annoying buyers who held it up under contract for 6 months. I made the offer when the property was boarded up so I couldn't even see the inside. After my offer was accepted, I got to view the inside and discovered it was way beyond the scope of repairs I was expecting or comfortable with. I had 3 contractors come and give bids and they were all high, so I pulled out of the contract and signed the cancellation form 3 weeks from date of acceptance.

@Allen Denham  Your story seems bizarre, and not believable.  The State has no involvement with EM on a sale.  Perhaps the title co. puts disputed EM in some type of court registry (with the state?) until the parties litigate it,  but the state would have no claim on it.

@Nat Chan  Definitley an attorney.  I assume you properly canceled the contract during your inspection period?  You get no response from the title co,?

@Nat Chan  

  as long as you hit your dates in your purchase and sale contract you are due your money back.. In many states title companies will not release EM unless both parties sign cancellation agreements.. This is why for instance in our state. A BANK or lender will not fund the Loan ( acutally send money to title co. ) until they have recording numbers. Because if they put money into escrow and if for some reason buyer backs out prior to recording the money is tied up.

What happens in your case is YOUR AGENT should be telling you HEY the seller won't sign cancellation docs.. You then make a demand that they do it.. Since this is well past small claims if they won't sign cancellation docs you need to force the Title company to Interplead the funds to the court. Title company wants nothing to do with this squabble money goes to the court ... you are then in a mini court case judge rules on your contract and you either get your money back minus attornies fee's or the judge may think you were too late with your rejecting the Due diligence Items and rules to give the seller the funds.

@Allen Denham  

  the state has nothing to do with this its a civil matter. I suppose if both buyer and seller died then maybe the funds would go to the state as unclaimed funds. but that's about it.

I am pretty sure I am right.. AS a HML I never send my loan funds to escrow until I know ALL parties have signed.. I know this creates issues in wet closing states but I have my rules and I don't want my funds held hostage.

@Nat Chan  

  PS Nat you seem to run into all sorts of problems with your US purchases.. Did I help you on one in Arizona are you from Austrialia  /?

@Jay Hinrichs  Agreed with the EM going to the title co. I had a closing Friday, representing the seller, my Broker holding the EM.  I didn't wire the EM to the title co. until After the closing, in case something went wrong.  Here also, the title co. can Not release EM unless Both parties sign off, so you're headed to court.  Here in Florida the broker has a procedure, after obtaining a FREC ruling, where the EM can be released without having to go to court., thus the reason I always have the EM held with the broker.

This is why HOW earnest money is structured in a contract is critical.

First off the ideal would be for the buyers attorney to hold the earnest money. If that cannot be arranged then certainly not for the seller or the sellers attorney holding it.

In those cases we have the title company hold the earnest money or a neutral third party attorneys office for escrow.

You have to make sure the neutral third party is truly neutral meaning the sellers, sellers attorney etc. has no ownership interest in the title company holding the EM. You can place that provision in the contract for purchase and sale.

For earnest money it is key that the language is written in a away that the EM - IS NOT interpleaded into a court of law if both parties cannot agree.

If the buyer can demonstrate that the seller is in default or that the buyer has the right to cancel then the sellers consent will not be needed.

It's important to have that in there because I have seen sellers or attorneys do a ransom where they say your 50,000 earnest money we will dispute and then title will have to interplead into court. Eventually you will get the EM back but after a lot of time and aggravation. So instead Mr. buyer please cover my sellers attorneys fees of 8,000 and we will agree to the release right away instead of going to court.

The seller has no standing but they are holding the buyers EM hostage. This is why it is critical to be able to point to the contract where title HAS TO upon written request release to the buyer without the sellers consent if it is constructed that way. There has to be a clear and concise no brainer of course for title to act on. If there is anything unclear then you go to court etc.

So Nat really go over your EM provision and look at the fine print because one or two words means everything.

No legal advice given.

@Nat Chan  I would look at the cancellation form, it often says who gets Ernst money, and I wont sign one if it doesn't. Best of luck

Originally posted by @Jay Hinrichs :

@Nat Chan 

  PS Nat you seem to run into all sorts of problems with your US purchases.. Did I help you on one in Arizona are you from Austrialia  /?

 Hi Jay,

Yes many obstacles and challenges.

Indeed we corresponded a few years ago regarding some properties in Phoenix.

@Nat Chan  

  Ok well I think I have given you some pretty good advice on this 20k.

/also I just bought a lot on America st in Charleston.. I think you had a property there as well.

Originally posted by @Jay Hinrichs :

@Nat Chan 

  Ok well I think I have given you some pretty good advice on this 20k.

/also I just bought a lot on America st in Charleston.. I think you had a property there as well.

 How interesting that you bought on America St. Can you share more details please? I assume you went to Charleston to do inspections. I just sold my 4 bedder on Drake St.

@Nat Chan    I am building new construction homes in Charleston..

the inner city is re gentrifying and frankly its red hot some of the best I have seen .

I have 7 under contruction right now in those neighborhoods .. one would drive through there and wonder what the heck but its quit fascinating really...

Are you knocking down the existing properties on America St to rebuild or buying vacant lots?

Yes gentrification; my favourite word. That was what I saw and why I bought there but my properties was in a high risk flood zone and had structural problems and I got nervous. 

I think you're making some good investments. I would still be interested to own there. If you need a PM, please let me know. I know THE BEST property manager and realtor you could ask for.

@Jay Hinrichs

Which lot on America?   Last year I helped my daughter buy a townhouse on lower America and then renovated it for her.      Now she's ready for guys like you to build more value into the area!   :-D   I'm sure you'll do well with it.  Red hot is right.   Digital Corridor on it's way!

@Nat Chan

I had looked at your 4 bdrm townhouse on Drake for my daughter, myself and clients but Drake is still one of the rougher streets there.   Hope you did ok with that one.

@John Semanchuk  

  here are a list of my current projects

8 Kyle   Pending 430k

America just got plans break ground march

Nunan under way

woodal under way both nunan and woodall are 400k or so.

Simons

North Charleston circle I have bought 5 lots there sold 2 working on others and a 6 acres project we will do 40 or so on.

Lets just let this thread die we really don't want to crate completion for ourselves do we !!

I also did one in Old mt pleasant ( RED RED HOt ) and I have one going iN Mt pleansant currently

All I am going to say  LOL

Originally posted by @John Semanchuk :

@Jay Hinrichs

Which lot on America?   Last year I helped my daughter buy a townhouse on lower America and then renovated it for her.      Now she's ready for guys like you to build more value into the area!   :-D   I'm sure you'll do well with it.  Red hot is right.   Digital Corridor on it's way!

@Nat Chan

I had looked at your 4 bdrm townhouse on Drake for my daughter, myself and clients but Drake is still one of the rougher streets there.   Hope you did ok with that one.

 John, I can't believe you toured through my house! At least one of us did; I've never seen it once in my life. I made 15K profit, so I was lucky on that one.

@Nat Chan

At least twice!   I really wanted to convince myself that it was a good deal and maybe with time it will be for whoever bought it.

I will say, whoever you got to do the renovation work.... I wouldn't use them again.   It was hard to show a house with the kitchen cabinet doors painted shut.   :-)

@John Semanchuk  

To be perfectly Frank I had one of my old HML clients call me and say hey this is a super hot market I want to do some flips.. So I funded 3 for him. 1 in Wegner one on Ashley and one ( cant remember the name.) so I did them site unseen.. then flew out there and checked it all out and said what the heck this is one of the hottest market s in the US.

So I bought 7 lots and proceded to build new construction and its gone well. the first 3 they bought turned and I made my HML rates.. then I did 3 rehabs for myself those went well and one in OLD mt Pleasant we made ridiculous money..

so I am there to stay. I have a few subdivisions under contract and as long as my BOEING friends stay ( which is assured I will be there)

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