Rental Property Investor · Member since 2019 · 5 posts · 0 votes
Hello Everyone,
Hopefully someone here can help answer a question.
My husband and I live in California, we had put our home for sale and escrow started. Two days before closing the buyer backed out and will not sign a earnest money deposit release.
What are the options here?
Note: She has agreed to release it if we “split” it, but we want the entire deposit.
Investor · Los Angeles, CA · Member since 2015 · 213 posts · 162 votes
6y
You have to refer to the purchase and sale agreement. Are they entitled to the release of their funds? Did they breach the contract? Were contingencies actually released or did they have contingencies intact? Just because they backed out before closing doesn't mean you would be entitled to their earnest money deposit. The situation is dependent on what the contract says and how closely timelines were followed.
Please elaborate on the specifics and someone can be more helpful. The best course of action is always to discuss with your broker and legal counsel in your specific situation.
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
You may have to sue for the money.
I was buying a place in MO, the owner lied about mold and I backed out of the sale - within the 10 day window. He refused to sign a release to return the money back to me. In MO, there are only 2 ways to get the EM back if you're the buyer.
1. Owner signs the release. 2. Buyer sues for it. At least that's according to the title company who was holding my money.
I got it back in my instance by calling my agent and dictating exactly what I wanted him to tell the sellers agent - "The owner WILL sign the EM release by close of business Friday or I WILL file suit at start of business on Monday".
Rental Property Investor · Member since 2019 · 5 posts · 0 votes
6y
@Enrique Huerta
Purchase agreement states that the seller is entitled to deposit as long as "mutual release" - so they have to sign the EMD release and escrow will give us funds.
All contingencies have been met and what we believe is that the buyer just got cold feet and backed out last minute.
Investor · Los Angeles, CA · Member since 2015 · 213 posts · 162 votes
6y
If contingencies were released and they were technically obligated to move forward then you are entitled to the funds assuming the contract states that as being the case. I am not providing legal advice but in my experience you will have to sue for the deposit if the buyer does not sign the mutual release. Speak to your broker about your rights and remedies in this situation.