EMD deposited in escrow- after I called/text “I’m cancelling”

Buying & Selling Real Estate

EMD deposited in escrow- after I called/text “I’m cancelling”

Lakewood, CO · Member since 2017 · 12 posts · 0 votes

Hello BP people, I’m juststarting out, Found a house for rehab (Carson Ca). In short, made an offer based on comps yet to be seen physically. I did hand over the EMD with the understanding that I’m going to view the comps and let you (the agt) know if its a go. The agent was doing this as a wholesale deal and indicated we’d need to move “fast” if I want it. Low & behold when I called/text 10 mins later to cancel he indicated I was too late! Much to my surgrin. I reinterated “I’m cancelling!” Later i noticed the wire transfer @1:42pm later the same day. Hours after my call/text cancelling. The Q is did I not formally cancel the deal based upon my call & verified time stamp on the cancellation text? They (New Western Accusitions) is trying to keep “EMD”. My thinking is the agent acted in a non-professional if not deceitful. Escrow should not have been opened, therefoe the sales contract is null and void or unenforceable! correct? Any input would be appreciated, H. Paul Vaughan Lakewood, CA

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Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

It's not a matter of finding a lawyer that "understands contract law". It's a matter of finding a lawyer who is willing to "be hired to fight your side of the issue".

I have no idea what your contract says and I have no idea what local customs and laws are. I do know that if you signed a contract that the "EMD was non refundable" and they had a process where the ball started rolling (IE a digital imprint of the check is sent to the secretary, who in turn emails it to billing, who follows process 42.....) Then a very real counter argument could be "Nope, nobody could have purchased it because once the email is sent then the property is automatically removed from the system so no other checks can be processed".

You can insist you are right and everyone else is wrong, their experience or assistance is not what you want to hear. So instead of using that information to help you get your money back, you are fighting people on the site. Well none of us have your money. So sure, you are right. The money is as good as in your bank now.

If someone on this site was asking questions, I would recommend they see if they have outs in their contract. If so I would use one of those as opposed to arguing up the EMD tree. But to answer your initial question, In my area you would need to use a form to cancel, verbal and text messages are not "the way to cancel a contract". Ours actually has lawyers acknowledging they can use email instead of fax. I am pretty sure not one of them here would accept a text message as a signature on a cancellation document.

See this reply in the discussion

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
8y
Do you have a contract? The contract typically allows you the opportunity to inspect and the option to terminate if the property is not what you expected. If you don't have a contract, you should really consider using a REALTOR next time that understands the law and can protect you.
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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
8y
Sounds like you had already initiated the wire transfer prior to the text, but regardless none of us have read your contract so we can’t give you a definitive answer. However, most contracts have contingencies in them (i.e. inspection, financing, etc) that would still allow you to cancel the sale. Does yours?
0 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Who did the wire ?
0 Reply
Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Paul Vaughan you need to retrieve your emd based in the contract, not what you feel is equitable. ”I called three times” or “I called 10 minutes later” is not a legal excuse outside of what’s in the contract. Your best bet is likely sending them a letter from a lawyer . The threat of going to court will probably get your emd back considering the company your going against. Pleading irrelevant facts obviously isn’t working
0 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
Where is the rectified cancellation contract? It is up to sellers now.

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Tony Suniga
Realtor · Las Cruces, NM · Member since 2018 · 8 posts · 4 votes
8y
@Paul Vaughan - There is some missing information here. If the agent was given a EM check then that leads me to believe that a contact was signed. Once signed, title has to be notified as a small window has now been opened up for the funds to be deposited. Agents ARE NOT allowed to hold EM funds any longer then it takes to hand over to title or Qualifed Broker. If wired, the title company would have strict rules that direct YOU as the buyer on how to wire funds. There are national laws and state laws regarding the disbursement of EM funds. Once held by title usually funds are not given back unless released by both parties which requires two signatures. Title has to legally hold those funds until signed or a court has ordered disbursement. Refer back to your purchase agreement on this one as it should have an EM clause built into it. It’s fine if you wanted to cancel the contract, there are multiple stages in the purchase process where a buyer has an out. But once title holds funds you must meet one of those two requirements listed above.
3 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Matt K. The Agt. Again, the time stamp for the wire was hours after i text, called & emailed to the agt to cancell! What do you think?
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Tony Suniga Thx! I’ll review everything again
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Tony Suniga Hi Tony, All good and usful information. My view is simple if i handed you EMD for a house (signed purchase agreement etc), then drove around the corner & came back to you and said “I wish to cancell”. You could not have transfered any $ yet. Are you no obligated if not based on Professional ethics to give my check back to me/a seller? 10 hours or two days later, I’m toast. If not mediation/arbitration then in court i should prevail. Thanks!
0 Reply
Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Paul Vaughan whether they deposited or transferred the money or not, you agreed to pay the EMD as soon as you signed the contract, so the clearing of the money has no bearing. The contract will indicate the condition in which you are owed a refund of your EMD. If it is a non-refundable deposit, lesson learned.
2 Reply
Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
Good luck getting it back. I had buyers "back out" on a contract after they got a commitment, appraisal was done, inspection done, and everything was ready to close. That EMD is still sitting in a bank somewhere and will likely not be moving anytime soon.
I am not sure of the timeline in your post. You have an agent a check, yet you mention a wire transfer? If you handed over EMD and a signed contract, you need to read your contract.
0 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
Originally posted by @Paul Vaughan:
@Tony Suniga
Hi Tony,
All good and usful information. My view is simple if i handed you EMD for a house (signed purchase agreement etc), then drove around the corner & came back to you and said "I wish to cancell". You could not have transfered any $ yet. Are you no obligated if not based on Professional ethics to give my check back to me/a seller? 10 hours or two days later, I'm toast. If not mediation/arbitration then in court i should prevail.
Thanks!
No. The opposite is in fact true. You sign a contract, that EMD in most states has to be deposited per law, and then you have to work through that states release laws. Not depositing an EMD is a criminal offense in every state I do business in.
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2 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Matt K.the dis honest agent. Found an atty and going to court. The wire was not sent from him until 1:42 pm. We ment in the morning. New Western Acc is a dishonest, misleading & therefore going to be ordered to pay me back. Never deal with New Western in Long Beach. I need to spread the word
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Nathan G. Found a lawyer who understands contract law and wire transfer law. We did not have an “official escrow” since any other buyer could have walked into escrow prior to 1:42pm (wire transsfer time stamp) and have purchased. No Ethics violation, just first come first serve. Joey Keane is a sneaky agent...
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Steve B. Thanks i did find a lawyer who understands. No “official escrow” if you walked into escrow @ 11:00am with EMD. I would not have had any recorse. Next time i work with someone with values/morals & comomon sense. Then he ont have to tell it to the judge. I have nothing good to say about New Western acc nor Joey Keane..
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Sam Shueh yes Sam if was not dealingwith New Western...Stay away. I told dude (Joey Keane) to wait until i looked at comps. Real unscrupulous (Joey Keane & mngr Donald Bake) in the Long Beach office...
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Tony Suniga Title never had anything. This is about a greedy agent who must have needed the money. No realtor i know would have moved forward if a client cancelled IN 10 MINUTES. Never use New Western...
0 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
8y
@Jason DiClemente Sorry Jason. Wrong as any other buyer could have walked into escrow prior to wire transfer and purchased. Read wire transfer law & Dept of Real Estate ethics. Also interviewed many seasoned agents who said “ I dont want to go to court so yes i would have given my clients check back”
0 Reply
Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Paul Vaughan you may hope that I'm wrong, but once you have an executed contract, no one else can come in and buy the property. The moment both parties sign, you are bound to that contract, and the way the escrow payment is handled from that point on depends on what the co tract says.
3 Reply
Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
8y
@Paul Vaughan,
It's not a matter of finding a lawyer that "understands contract law". It's a matter of finding a lawyer who is willing to "be hired to fight your side of the issue".
I have no idea what your contract says and I have no idea what local customs and laws are. I do know that if you signed a contract that the "EMD was non refundable" and they had a process where the ball started rolling (IE a digital imprint of the check is sent to the secretary, who in turn emails it to billing, who follows process 42.....) Then a very real counter argument could be "Nope, nobody could have purchased it because once the email is sent then the property is automatically removed from the system so no other checks can be processed".
You can insist you are right and everyone else is wrong, their experience or assistance is not what you want to hear. So instead of using that information to help you get your money back, you are fighting people on the site. Well none of us have your money. So sure, you are right. The money is as good as in your bank now.
If someone on this site was asking questions, I would recommend they see if they have outs in their contract. If so I would use one of those as opposed to arguing up the EMD tree. But to answer your initial question, In my area you would need to use a form to cancel, verbal and text messages are not "the way to cancel a contract". Ours actually has lawyers acknowledging they can use email instead of fax. I am pretty sure not one of them here would accept a text message as a signature on a cancellation document.
5 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Is it common for an agent to send EMD vs doing it yourself ? The deals I've done I just went to the bank and did it (could even do it online myself).
0 Reply
Dek Bake
Orange, CA · Member since 2014 · 2 posts · 6 votes
8y
@Paul Vaughan & the Bigger Pockets Community,
Paul who was a licensed appraiser for 30 years came into our office before he ever received a wholesale property to go over the contract, addendum and all the terms of our agreement, and even went home with an example copy of the paperwork. A couple of days later Paul received an email about an available property in Carson, CA and immediately contacted our sales agent letting him know that he wanted to purchase the property. We sent Paul a purchase agreement, with the addendum stating that this is an as-is sale and if the buyer fails to perform his EMD will be held by the seller as liquidated damages. Paul Signed the contract and deposited the Earnest money check the next day at the property showing and escrow was opened up immediately. Paul also signed a Contingency removal removing all contingencies, buyers inspection Advisory, & Release of EMD amendment. Two days later Paul signed and acknowledged our original seller's transfer disclosures. Paul filled out financing applications with multiple lenders and then chose Orchard funding who is a reputable hard Money Lender in our market. Paul had the lender send loan documents to escrow, ordered an appraisal and scheduled a time to close. He arrived at the escrow office to close and tried to negotiate loan terms with the lender at the closing table and walked out of his closing appointment, Paul scheduled another appointment to close with escrow and never showed up. Paul wasted a ton of the lenders and escrows companies time and eventually cost us the deal which led to a loss for our company.
We handled everything professionally and ethically throughout this entire transaction providing Paul with multiple opportunities to perform on his contract including a small price reduction which he accepted.
We are not in the business of taking peoples earnest money deposits in any situation but we can not afford to lose money on deals because potential buyers think that legally binding agreements do not apply to them.
I hope this clears up the confusion of Paul's complaints on this thread & I'll be happy to update everyone after we litigate this dispute.
5 Reply
Paul Vaughan
OP
Lakewood, CO · Member since 2017 · 12 posts · 0 votes
7y
@Dek Bake You must have majored in Drama (True Thespian)
“How about a round of applause”...Mr Bake, You were so belivable when YOU told me (long before all the docs, escrow etc) that “I don’t want to keep your money...“twice! Since you knew then Joey had acted inappropriately in addition to keeping this house from other Agents (high comm i guess), Remember? Review your convo sheet. I was stunned when you changed your mind. And, then text me
“It sounds like flipping homes might not be the best profession for you it seems like you gravitate towards the negative and look at the cup half empty instead of half full”
So, here we have a COO questioning a first time investors personally and knowledge of the Carson real estate market when the issue is/was Joseph Keane under his management misdeeds. You know i was open to looking at other properties. And, we know that sales price was too high as You sold it for $430k. Soon after.
Appears You did have other investors... This house has major external obsolescence issues! So did the “real” comps, not the sales you and Joey tried to streer me towards.
After that Alex, Joey et al coerced signature here & there. ”it is the only way you might get your money back...”
“October Surprise” You need 60k to close, not the 40k (+\-) Joey & your lender told me (Bo @ Orchard Funding).
See you at Compton’s courthouse, soon.
Technology does not lie.
BP ppl No one would/should keep a clients check after a cancellatin within 10 mins!
Called Joey, text him, emailed him & called Joyce @Shallimar to confirm-no official escrow should have been opened. It is a violation of Ethics, public trust, reputation etc?
Mr Bake-
Your Corp
Your Agent(s)
Your Words
Your Lender(s)
Your Escrow
Your Fault
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