Buyer doesn't show up to closing

Investor · Beaumont, TX · Member since 2016 · 171 posts · 277 votes

Hello,

I had a retail buyer put in a cash offer on my flip for sale. Went through inspections with no issues. Day of closing, I showed up and signed all my papers, buyer's were scheduled for 1.5 hours later but never showed up. Their realtor called them a few days later and she said she was out of town because her mom was sick and she still wanted the house. Another week passes and still has not closed. She says she still wants the house. 2 weeks have passed and she has completely cut off contact and has not responded to the realtor. I can't even get the earnest money as they can not get ahold of her to sign the release.

Realtor says I should get a lawyer and go for damages, I don't know if anything would happen as they can't find her. Any thoughts?

Thanks

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Nick C.

Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes

I think you should put the house back on the market asap. Although you won't be able to access the escrow funds unless she signs a release, the same goes for her. She will come around eventually since it's her money in there, and you can deal with it then.

Anyone who recommends you getting a lawyer and suing someone has probably never sued someone. It's expensive, time consuming, and stressful.

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Greg H.Pro Member
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Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
7y
First thing is to terminate and put the property back on the market. The title company will not release the EM until both parties sign the release. The is a procedure to demand the EM although some title companies will not release it
Again, the most important step to get the property back active and worry about the rest later.
Keep in mind that when you find another buyer, you will have to use another title company as the current one will not close another file without this one being resolved
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Jim Macedon
Round Rock, TX · Member since 2017 · 86 posts · 45 votes
7y
I've been through a similar situation. If you used the standard TREC sales contract, it clearly lays out the terms for the release of earnest money. Either you both sign a release OR one side can demand a release from the title company, and if the other side doesn't object within 15 days, the title company is supposed to release the money. Point out the wording in the contract to the title company, and inform them that you are demanding a release of earnest money. If they act like they're not going to adhere to the contract, you need to get your attorney involved.
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Greg H.Pro Member
Moderator
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
7y
Originally posted by @Jim Macedon:

I've been through a similar situation. If you used the standard TREC sales contract, it clearly lays out the terms for the release of earnest money. Either you both sign a release OR one side can demand a release from the title company, and if the other side doesn't object within 15 days, the title company is supposed to release the money. Point out the wording in the contract to the title company, and inform them that you are demanding a release of earnest money. If they act like they're not going to adhere to the contract, you need to get your attorney involved.
Unfortunately, the title company is not bound by the contract in this case. Many if not most view it as limiting their potential exposure and will not dispose of EM without a full release
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Jim Macedon
Round Rock, TX · Member since 2017 · 86 posts · 45 votes
7y
Then you take them to court.
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Greg H.Pro Member
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Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
7y
Originally posted by @Jim Macedon:

Then you take them to court.
The OP did not mention an amount but with the customary $500-1000 EM (Might have been more here on a cash sale) you are going to spend a heck of a lot more than that on attorney's fees to force a title company release
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Jim Macedon
Round Rock, TX · Member since 2017 · 86 posts · 45 votes
7y
True, that's a calculation everyone has to make for themselves. But in the situations I've had, the mere threat of bringing the attorneys into it--or in one case having the attorney write them a letter--resolved the issue pretty fast. And I think establishing yourself as someone that doesn't lie down makes it a lot less likely that people will attempt to take advantage of you in the future. That's just my style and philosophy. Everyone has their own way of doing things. I don't advocate being a jerk of course, but I do advocate presenting yourself as formidable.
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Pete Reed
Rental Property Investor · Member since 2018 · 26 posts · 9 votes
7y
@Nick C. i agree 100%
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Brian Ploszay
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
7y
The legal route is simply not worth it. Legal fees may be more than potentials collections. If you win a judgement, you may not ever collect it. But you still have to pay your attorney.
Usually, there is a way to declare default and take the earnest money. Consult an attorney about this because it usually isn't easy.
The fact that the other side has a real estate agent is helpful. That agent is motivated to get their commission. So lean on them.
Since communication is not good, it is close to time to terminate that contract. It is very unlikely that they will come to the closing table with their history of non-existent communication.
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Greg H.Pro Member
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Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
7y
Originally posted by @Jim Macedon:

True, that's a calculation everyone has to make for themselves. But in the situations I've had, the mere threat of bringing the attorneys into it--or in one case having the attorney write them a letter--resolved the issue pretty fast. And I think establishing yourself as someone that doesn't lie down makes it a lot less likely that people will attempt to take advantage of you in the future. That's just my style and philosophy. Everyone has their own way of doing things. I don't advocate being a jerk of course, but I do advocate presenting yourself as formidable.
While I agree this tact might be effective on a person to person level, the title company is not going to bat an eye. All title companies have a staff attorney. Additionally, in major cities in Texas there are literally 50+ title companies so "establishing yourself as someone that doesn't lie down" can pointless and expensive as at the end of the day this is a business that has a goal of profitability
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Jim Macedon
Round Rock, TX · Member since 2017 · 86 posts · 45 votes
7y
Shrug, I've gotten my earnest money back every time. That seems more profitable than letting someone take it when TREC has made clear what the proper procedure is.
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Guy Gimenez
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
7y
Your realtor has clearly never been in litigation before and has no clue what it does to the parties involved. If you have deep pockets and a ton of time on your hands, litigating is an excellent way to rid yourself of both. Stop waiting. Have an attorney review your contract and determine your options. Hopefully your agent is more skilled at drafting contracts than giving advice. If you used the TREC form, review paragraphs 15 and 18. Send your demand letter immediately so you can start the clock ticking. If you want to get it back on the market, release the E/M to the buyer so it doesn't create an issue with the title company and move on. You don't want to hold onto a flip while chasing a non-performing buyer.
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
7y
@Adriel Hsu you don’t need a release signed for the deposit. Send a time of the essence letter by certified mail and if they don’t close in compliance with the letter (check your state requirements) then you are entitled to the deposit without any release.
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Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
7y
Originally posted by @Jessica Zolotorofe:
@Adriel Hsu you don’t need a release signed for the deposit. Send a time of the essence letter by certified mail and if they don’t close in compliance with the letter (check your state requirements) then you are entitled to the deposit without any release.
This is the first I am hearing of this being possible. I imagine if my attorney could have done that, he would have. We sent the letter of calling to close, they didn't show up and no check was ever cut to me until the other party agreed.
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
7y
That’s the whole point of a deposit. Why would a buyer ever agree? Talk to your lawyer. They should have done a time of the essence letter and then released the deposit.
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Jim Cummings
Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
7y
@Jessica Zolotorofe. This deal is in Texas - we have our own way of doing things!
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Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
7y
Originally posted by @Jessica Zolotorofe:

That’s the whole point of a deposit. Why would a buyer ever agree? Talk to your lawyer. They should have done a time of the essence letter and then released the deposit.
Letter was sent, after the date on the letter there was no release of money until both parties agreed. Maybe mine was different because the buyer claimed they had a "job transfer" after they got their commitment. Needless to say what I got from speaking to a few lawyers was that they could not release it to me without both parties agreeing.
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
7y
How much was the deposit? Depends on your contract but a job transfer is not usually a valid reason to terminate. Deposits are put up for defaults... exactly this reason. I would sue if it’s a worthwhile amount of money.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Jessica Zolotorofe:
@Adriel Hsu you don’t need a release signed for the deposit. Send a time of the essence letter by certified mail and if they don’t close in compliance with the letter (check your state requirements) then you are entitled to the deposit without any release.
Might work in your area .. but out here on the left coast were attorneys are not really involved with vanilla SFR transactions.
the title company makes the rules they dont make judgement of law.. they simply will NOT release EM without both parties signatures and who gets what.. There is some attorney in the deep background with title companies on the west coast but as clients we never get to talk to them.. you only talk to the escrow officer who .. they will call their attorney if they need and just repeat what he says.
40 years plus of brokering real estate on the left coast multiple thousands of transactions.. EM is major pain when the parties dont agree.. and its mainly emotional anyway.. and as stated usually small dollars.. out here my attorney is 450 an hour.. how are we going to have them rattle a cage for a 500 or 1000 refund.. I get it in attorney closings states were the attorney is not on the clock.. I see that in all the responses from those that work in attorney closings states.. first words out of their mouth is call an attorney well that's fine when they will give advice and its rolled into one set standard closing fee..
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
7y
That’s terrible. Glad I don’t practice in Texas!
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