Earnest Money deposit question - Florida

14 Replies

Hello everyone.

I am in the process of selling my first real estate property and I am making a go of doing a fsbo.  I have a question and I'm hoping some of you seasoned investors can help me out.

I had the deal under contract and the buyer pulled out for a bogus reason (didn't get his funding, never kept me informed, sent a text saying he would prefer to find something new, falling out with his agent, blah blah).  My attorney (and me) believe I am entitled to the earnest deposit.   But- surprise surprise he says he's broke and can't afford it.  I mention that his agent has the money already in escrow to which he informs me that she never deposited the check.   Before I call her I would like to gather my facts.

1)  Isn't she required to deposit the check within X days? I think its 3 in Florida.

2)  Do I have recourse against her or her broker if this wasn't done?

3) On a scale of 1-10, how dumb was I not to have my title company hold the deposit.  (don't answer that please)

4) On a scale of 1-10 how dumb was I to only get $1000 earnest deposit?    For this small amount is it worth pursuing.   Right now I want to for principle.  I feel that they took advantage blatantly.  And of course since it was many newbie mistakes on my part its a little embarrassing.

Thanks for any advice!!

By the way- I said its my first real estate deal.  Clarification- its my first end to end comprehensive investment deal.  Bought the house at auction, full rehab, and selling fsbo.  SO many learnings-

Thanks again

Q) Isn't she required to deposit the check within X days? I think its 3 in Florida.
A)  I'll leave this one to a Fla investor to answer, but Depositing the check, and giving the check to whoever is holding the check in escrow is the same thing.

Q) Do I have recourse against her or her broker if this wasn't done?
A) Don't think so. Unless there were instructions in the offer stating otherwise, handing the EMD to the buyers agent is fine.

Q) On a scale of 1-10, how dumb was I not to have my title company hold the deposit. (don't answer that please).  
A) OK, I won't answer...but if I were to answer, not that dumb.  Happens all the time.

Q) On a scale of 1-10 how dumb was I to only get $1000 earnest deposit? For this small amount is it worth pursuing.
A) No...and No. I never pay more than $1000 in EMD.

Q) Right now I want to for principle. 
A) You mean "emotion".  Leave emotions at the door (the back door).  Move on.

The agent messed up. Violations there. 1k not good nor bad that is between buyer and seller. I wonder if a "wholesaler" messed you over. We're they trying to assign the contract?

Originally posted by @Kirsten Mastro :

Hello everyone.

I am in the process of selling my first real estate property and I am making a go of doing a fsbo.  I have a question and I'm hoping some of you seasoned investors can help me out.

I had the deal under contract and the buyer pulled out for a bogus reason (didn't get his funding, never kept me informed, sent a text saying he would prefer to find something new, falling out with his agent, blah blah).  My attorney (and me) believe I am entitled to the earnest deposit.   But- surprise surprise he says he's broke and can't afford it.  I mention that his agent has the money already in escrow to which he informs me that she never deposited the check.   Before I call her I would like to gather my facts.

1)  Isn't she required to deposit the check within X days? I think its 3 in Florida.

2)  Do I have recourse against her or her broker if this wasn't done?

3) On a scale of 1-10, how dumb was I not to have my title company hold the deposit.  (don't answer that please)

4) On a scale of 1-10 how dumb was I to only get $1000 earnest deposit?    For this small amount is it worth pursuing.   Right now I want to for principle.  I feel that they took advantage blatantly.  And of course since it was many newbie mistakes on my part its a little embarrassing.

Thanks for any advice!!

 Kristen,

I am an agent in FL. Yours is basically a legal question so it is difficult to answer. No legal advice given here.

1. The first mistake was you not getting a receipt from the escrow agent. It is the Seller's responsibility to confirm the deposit of escrow with an escrow agent according to the contract. It is also your responsibility as the seller to follow up with the buyers loan progress.

2. This is a tough one. This is a lawyer question. But as a FSBO the agent does not have much responsibility to you. The agent's responsibility is to the buyer. Not providing EMD to the escrow agent on the contract within the timeframe in the contract may be a breach of the contract terms. If you file an escrow dispute and are awarded escrow then you may have to questions the broker's responsibilities when trying to collect. Who knows? If there is an escrow dispute you have to work that out first to determine if the money is yours.

3. You can request to use your title company but the buyer can choose their own settlement providers according to RESPA. I have had buyers choose to have attorneys hold funds. I have also had buyers choose to have a preferred escrow agent hold funds. All escrow agents are supposed to follow Florida law when it comes to  handling escrow funds and dealing with disputes.

4. The amount of deposit when it comes to owner occupant buyers is unimportant as far as I am concerned. Buyers remorse is buyers remorse whether they have $500 in escrow or $5000 in escrow. I have seen buyers walk away from $20k deposits and have had buyers want me to fight sellers to the death for a $500 deposit. On financed deals there is a limit on how much the buyer can put up for deposit before it gets scrutinized by the underwriter adding risk to the buyer getting approved. And the financing contingency is usually strong enough for the buyer to get out of the deal and have their EMD returned.

Not sure that it would be economical to pursue $1000 but it sounds like mess. I have no issue with people selling FSBO but there are a lot of detail tasks that an agent does during escrow that are never considered. I would recommend getting a checklist of contract to close steps to follow when selling FSBO. A checklist that also has the responsible party for each task is very helpful. Also, what you can do is hire a transaction coordinator to manage the escrow and make sure everything is done according to the contract.

As an agent I have no problem selling FSBO properties but is a seller expects me to do the work for both sides of the transaction for one side worth of commission they are deluding themselves. 

@Kirsten Mastro

Well, did the agent "receive" the check, and not give it to their broker?  If so, the agent is fully liable, could lose their license, IF the buyer is in default.  If the buyer never gave the check to the agent, a little grayer since the agent has no agency relationship with you I assume..  We would have known that, and canceled the contract.  I wouldn't accept $1k EM on a sale, even though that's what most investors want to do,  just for this reason. I ASSUME THE AGENT USED A 2014 As Is FARBAR.  If so, the buyer had up until 7 days prior to closing to pull out based on the financing contingency..  Was he before, or after this 7 day window?

Forget where the EM was held or not held, deposited or not deposited - what was the language of the contract that you signed with them? I put offers on houses all the time, and put the deposits into whatever the buyer wants. Either through inspections, walk throughs, or simply "I don't want this one anymore" I have withdrawn offers and always walk away with the EM. It is all about the language of the contract. If you gave them a certain window to back out per the contract, and they did so, then the money goes back to them! You noted that one of the reasons the buyer gave was "didn't get his funding". If he had a mortgage contingency in his offer - then this is not a bogus reason, and one for which he is entitled to his EM back.

@John Thedford, Hello, I was doing a Google Search for information concerning Florida Earnest Money Deposit rules and I saw there was a BP post. My problem is that my listing agent for my Commercial half acre down by the AFBase on the main Dale Mabry Hwy. decided to buy the property while he had it listed with his big sign on the property. He tried twice to buy it. The first time the City said he could not build the amount of apartments that he wanted and the second time he was using it for a 1031 Exchange that fell through. He never deposited any Earnest Money. He just gave me a phone call when the deals didn't work and continued to keep the listing. What if any are the consequences for a listing agent to treat me like this? The contract requires mediation for any disputes. Thanks

@Michael Haynes

The agent was representing the transaction, you wanted to buy it, it didn't go through, and he bought it? Did you give earnest money? If it was not deposited on behalf of the owner the agent did a MAJOR wrong. He should have presented the contract and deposited the earnest money. The exception is if the seller said NO immediately, he should have return the check undeposited. I have had agents hold the EM check for a couple days while I got an inspection. If it didn't pass, I cancelled the deal, called the agent, and they would just tear up the check.

Hi @Michael Haynes ,

Are you saying

1) You contacted an agent to list your land (Lets call him Ted)

2) Ted listed your property for you as a sellers agent

3) Ted then said "Hey I kind of like it, lets talk price for me"

4) Ted failed to perform 

5) Ted said "Lets do this again"

6) Ted failed to perform

7) Ted is still trying to sell your property?

@Mike Cumbie, Hello, My agent listed the property and it went a few months on Loop.net etc. Then, he made me an offer for the land and 3/1 house to build apartments with and we signed a contract for sale. A month went by and the City would not approve the amount of apartments. He just called and said it wouldn't work. Then, he made another contract because he needed a 1031 Exchange property and that didn't work. A few months later his listing agreement expired and I took down his big sign when it fell apart. All I received was a phone call from him and no mention of Earnest Money. There is a conflict of interest and I think his real estate license is in jeapardy? And what about Earnest Money? He calls me for favors when he needs an AC or roof repair, but, did not continue to try and find me a buyer and he knows every builder in S. Tampa and everyone knows him. This is the third time in a few years that the agents in S. Tampa have done this to me. The other two times we threatened lawsuit and they gave me the whole deposit without commission.

What was the earnest money for? I don't see any mention of EM in your latest post. Can you elaborate more? When? For what contract? Did he legally provide you with a cancellation of the offer?
@Michael Haynes

@John Thedford, We signed a Contract for Sale for my CG half acre just off the main Hwy. sale price $225K. When the agent could not get approval from the City to build what he wanted he just called me on the phone. I think on the second contract he sent me a text, which I kept. There was no cancellation in writing. The EM should have been deposited by him. Are there consequences for making a deal with me, while he was the listing agent. Thanks for coming back with some comments.

I don't think there are consequences for him making a deal with you. You had the option to accept or decline. I would ask DBPR. You can find their website here:

www.myfloridalicense.com

Good luck

If there were any violations it might concern if he wrote earnest money checks and failed to deposit. That IS a violation.