So I cancelled an assignment contract with a wholesaler. Closing date with Sept 10, but the title company wasn't able to close on time. They needed a blue dye test, but didn't keep me updated, until I finally asked and they said they had filed it with the wrong department or town. In the interim, I had reflected on potentially shady pattern in my interactions/encounters, I decided to cancel the deal per the contract as the title was not deliverable by the closing date, confirmed by the title company.
How do I get my earnest money deposit back, and when does the title company give it back?
Not sure what a “blue dye” test is, but that doesn’t sound like a title issue. Was there an actual title issue? Typically the title co. has to have both parties sign off on an EM release. If one party won’t sign, the other party has to go to court. We don’t know what your contract says either.
pert near every EM squabble I have been involved with both parties have to sign cancellation docs that the title co or lawyer sends out.. once those are back money is released that day or next..
if the parties cant agree money sits in escrow.. some board of realtor forms have mandatory non binding mediation clauses so if you cant agree you go to mediation which generally cost each side 1 to 1.5 thousand.. so if your EM is just 500 or 1000 you will lose money going that route..
then if you cant still agree the title company or attorney at least on the west coast will send the funds to the local court with an interpleader.. IE asking the court to dispurse..
If you get in a big squabble over it.. sometimes its just best to say hey I will sing off and split it with you .. I know you probably don't like that .. but that's how I have handled it when I am a seller and the buyer defaults for no good reaons day or two before the close and I wont release it.. but I usually have 5 to 10k EM deposits.. so if I get half and they get half that satisfies me..
The blue dye test was something that was required to be signed off by the local water and sewage company.
I emailed the title company and they said they would mail a check to me. I never had to sign any contract release for the earnest money deposit or even to cancel the contract. I was working with a wholesaler.
The contract did clearly state that if the title was not deliverable by the closing date, that I could cancel the contract (which is what happened).
@Vincent C. hopefully it is clearly stated in your contract. as long as you get a written termination from both parties in the deal you should be fine. Sometimes it takes a few days/weeks to get your deposit back
@Vincent C. I would be VERY concerned about this since your contract is presumably with the wholesaler to take the assignment of HIS contract. Did you put your EMD with the title company? Or did you pay it directly to the wholesaler? The EMD language in the A:B contract may not apply to you if you paid a deposit to the wholesaler - it would on your B:C contract in that case. Some wholesalers in my area have 'non-refundable earnest money deposits' paid to the wholesaler when the buyer signs the assignment. This is a just fancy real estate sounding way of saying "fee you ain't getting back"
It does clearly say in the assignment contract that the assignee (me) may cancel the contract if title is not deliverable by closing date (which is true).
I had already emailed the title company today and they said they would be mailing out a check for the earnest money. So far so good...
I had written by termination of the contract via email to title company. They didn't have me sign anything else..
@Vincent C. Okay awesome., so it sounds like they will be sending you back you deposit so you can move forward with another property. Best of luck to you!