Unable to Deliver Marketable Title Return of Earnest Money
Unable to Deliver Marketable Title Return of Earnest Money
A friend of mine, Kevin, recently is in a situation which I cannot seem to understand fully, but am hoping a Real Estate Attorney can shed some light on the subject.
Kevin searched the Internet and found a property that he wanted to buy. He called up and made an appointment to meet an Agent, let's call him Bill, at the property.
Kevin went through the property and loved it. He asked Bill to submit a verbal offer to the Seller.
The Brokerage for Agent Bill is a well know Brokerage. Bill never gave Kevin an Agency Disclosure form nor spoke to Kevin about Dual Agency and any kind of Agency disclosure was never signed.
A Contract of Sale was faxed to Kevin from the Seller, let's call him Mike.
In June 2017, Kevin reviewed and signed a Contract of Sale as the Purchaser for a Property in Brooklyn, NY and put down close to $400k for the Deposit on Contract (Earnest Money). Yes, it's a large sum, but there was a previous all cash offer on the property and Kevin, while he is using a Mortgage, offered a higher Purchase Price and a higher amount for Earnest Money to be deposited on Contract.
The Check for the Earnest Money on Contract was made out to the Seller's Attorney Mike as Escrowee, so I am assuming that the Earnest Money had to be deposited into the Escrow of the Seller's Attorney.
Kevin then Applied for a Mortgage at a well known Bank.
Title was completed and an Appraisal was ordered.
Sometime around mid-June 2017, a few weeks later, the Seller's Step-Sister filed a Lien of Rescission to stop the Sale.
When the Appraisal came back, the Lien of Rescission was discovered, the Mortgage Bank added the Lien as a condition to clear for closing.
A Civil Case was filed against the Seller and the Case was suppose to take place around December 1st.
Buyer's Attorney and Seller's Attorney agreed to postpone the original closing from 45 days after signing the Contract on June 13th to December 1st day, documented in email.
The Case was then postponed to January 29th, 2018.
Along the way, the Buyer's Attorney got sick and developed ALS.
When January 29th, 2018 came, the Seller's Civil Case was again postponed to April 1st, 2018.
The Mortgage Bank issued a statement that the Mortgage Contingency was no longer valid and has expired.
Kevin then changed Attorneys. By Feb. 5th, Kevin instructed his new Attorney to Cancel the Contract and get the Deposit returned. During this time, Kevin also had seen a property he would like to buy and had put in an offer to purchase which was accepted on Feb. 5th, the day an email went out to Cancel the original Contract.
At the same time, the Mortgage Bank then closed the Application since there was no point in continuing as the Seller could not deliver Marketable Title and the Mortgage Contingency had expired.
The Seller's Attorney stopped communicating with Kevin's Attorney. Kevin's Attorney called Seller's Attorney who did pick up the phone at that time and Seller's Attorney claimed he was sick with the Flu and was not in the office to take care of the Cancellation.
Kevin's Attorney, a week ago, was tired of waiting and then sent a Demand Letter in Writing to Seller's Attorney to promptly return deposit.
Kevin went to find out more about the Seller's Attorney, specifically if he had any problems.
We searched a public Court Website and found out that the Seller's Attorney was sued by a Client that was Purchasing a Property. The Client failed to get the Mortgage commitment. This Attorney failed to communicate that fact in time to the Seller of this property. As a result, the Purchaser lost his Deposit. the Purchaser sued and won, paid by the E&O Insurance from this Attorney.
Just yesterday, Kevin, who is very frustrated, went to the Seller's Attorney's Office to talk to him and find out why the Deposit was being help up. Seller's Attorney claims that he cannot speak with Kevin and can only speak with Kevin's Attorney and the Seller, but not Kevin directly.
Seller's Attorney is suggesting that if Kevin is looking for another property, then the Earnest Money would be in jepeoardy.
Kevin then contacts the Bill the Agent and explains the situation. Bill said that the Seller understands completely and absolutely agrees to return the deposit. Bill the Agent said that he will meet the Seller Directly and ask him to write an email to all parties to confirm his consent.
However, it seems doubtful as the Seller's Attorney seems to be pulling the strings and may be thinking that his Seller can keep the Earnest Money Deposit.
Sorry about the long explanation, but that is about the relevant facts of the case as I remember it.
This has been an INCREDIBLY frustrating experience for Kevin. I know this is just a public forum and I won't take any opinions as ADVICE.
Mostly I'm just venting as I can't understand how a Seller's Attorney cannot just return the deposit based on the fact that the Seller does not have Marketable Title more than 8 months into Contract AND that the Mortgage Contingency expired.
Any thoughts would be appreciated!