Earnest money stuck in limbo
Flipper/Rehabber · Chicago, IL · Member since 2016 · 123 posts · 38 votes
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
It's happened to us before on our own deals but always eventually got the $ back.
We do have a situation now with a client who had to kill a deal during the inspection period. It was a listed, not an off-market deal, and the seller would not sign the release of the EMD. Everyone, the attorneys on both sides & the seller's agent, agreed that our client should receive his EMD back but the seller would not release it. Because this was a listed deal we used the standard Illinois 7.0 contract. There's a clause in the contract where the holder of the EMD can release has the ability to release the funds back to the buyer if there's an impasse. We're forcing the holder of the EMD to execute that clause, which he is. The seller has 14 days to object to the execution of the clause but we're forcing the issue.
@Francis Rusnak your real estate attorney can handle this. This is covered by the laws in Illinois and you will get it back eventually. This happens rarely. The real question is, why is this just now coming up? I would have thought when the deal fell apart that your attorney would have immediately requested this.
@Francis Rusnak your real estate attorney can handle this. This is covered by the laws in Illinois and you will get it back eventually. This happens rarely. The real question is, why is this just now coming up? I would have thought when the deal fell apart that your attorney would have immediately requested this.
There was never a time when the deal officially fell apart. We held out hope the deal would still go through up until recently. You get some strange situations off-market when people randomly ghost you then come back out of nowhere -- they may have found a temporary financial solution then go broke again.
Good to know it sounds optimistic from your point of view. Thanks.
Don't stress over it, you'll get your money back. Let your attorney do his job and get a court order. Follow the process.
It's not like the guy has the money and ran off with it, the company has it and just needs something in writing saying it's OK to give you the money back.
@Francis Rusnak there is no way around this. Read the terms of the Strict Joint Escrow Order that you and the Seller executed. It clearly states that 2 signatures are required to release. Going forward, you may want to set up Sole Escrow Orders where only the remitters signature is required. IMHO, avoid the title company and always have your attorney hold the EMD.
@Francis Rusnak there is no way around this. Read the terms of the Strict Joint Escrow Order that you and the Seller executed. It clearly states that 2 signatures are required to release. Going forward, you may want to set up Sole Escrow Orders where only the remitters signature is required. IMHO, avoid the title company and always have your attorney hold the EMD.
Wouldn't it be the same situation if our attorney was holding? Meaning they'd still need seller signoff ...
As a default we always have our attorney hold EMD and aim for 2-500 unless we get pushback from the seller's attorney, like in this case.
We'll have to add Sole Escrow Orders into the mix and try and pass that as well in the future.
I can't say what your attorney would do. I can only speak to what I do as an attorney when I am holding the EMD of my client. The contract should keep EMD to a minimum and spell out what happens to the EMD in the event of a default by either party.
An ounce of prevention is worth a pound of cure.
@Francis Rusnak in California we have a legal process called an Interpleader and the Escrow Company has to initiate as the holder of the funds. Not sure if there is a similar process that can be done where you're at?
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
It's happened to us before on our own deals but always eventually got the $ back.
We do have a situation now with a client who had to kill a deal during the inspection period. It was a listed, not an off-market deal, and the seller would not sign the release of the EMD. Everyone, the attorneys on both sides & the seller's agent, agreed that our client should receive his EMD back but the seller would not release it. Because this was a listed deal we used the standard Illinois 7.0 contract. There's a clause in the contract where the holder of the EMD can release has the ability to release the funds back to the buyer if there's an impasse. We're forcing the holder of the EMD to execute that clause, which he is. The seller has 14 days to object to the execution of the clause but we're forcing the issue.
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
It's happened to us before on our own deals but always eventually got the $ back.
We do have a situation now with a client who had to kill a deal during the inspection period. It was a listed, not an off-market deal, and the seller would not sign the release of the EMD. Everyone, the attorneys on both sides & the seller's agent, agreed that our client should receive his EMD back but the seller would not release it. Because this was a listed deal we used the standard Illinois 7.0 contract. There's a clause in the contract where the holder of the EMD can release has the ability to release the funds back to the buyer if there's an impasse. We're forcing the holder of the EMD to execute that clause, which he is. The seller has 14 days to object to the execution of the clause but we're forcing the issue.
That's good info Crystal. I ran into a similar situation in MO - deal fell apart, seller would not release $3K earnest money. Until I called his agent and threatened legal action, that is. Which I hated doing, but I hated being out of pocket the $3K more. Wouldn't it be nice if we could all just get along?
I wonder if MO has a similar clause as the one you speak of.
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
It's happened to us before on our own deals but always eventually got the $ back.
We do have a situation now with a client who had to kill a deal during the inspection period. It was a listed, not an off-market deal, and the seller would not sign the release of the EMD. Everyone, the attorneys on both sides & the seller's agent, agreed that our client should receive his EMD back but the seller would not release it. Because this was a listed deal we used the standard Illinois 7.0 contract. There's a clause in the contract where the holder of the EMD can release has the ability to release the funds back to the buyer if there's an impasse. We're forcing the holder of the EMD to execute that clause, which he is. The seller has 14 days to object to the execution of the clause but we're forcing the issue.
Good intel Crystal. Do you happen to know if that same language for the holder able to release during impasse is available on the 6.1?
This particular contract was actually written on the Multi-board 6.1 -- try to use mult-boards even on off-market to make things cleaner when going through attorneys since they're used to them.
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
It's happened to us before on our own deals but always eventually got the $ back.
We do have a situation now with a client who had to kill a deal during the inspection period. It was a listed, not an off-market deal, and the seller would not sign the release of the EMD. Everyone, the attorneys on both sides & the seller's agent, agreed that our client should receive his EMD back but the seller would not release it. Because this was a listed deal we used the standard Illinois 7.0 contract. There's a clause in the contract where the holder of the EMD can release has the ability to release the funds back to the buyer if there's an impasse. We're forcing the holder of the EMD to execute that clause, which he is. The seller has 14 days to object to the execution of the clause but we're forcing the issue.
Good intel Crystal. Do you happen to know if that same language for the holder able to release during impasse is available on the 6.1?
This particular contract was actually written on the Multi-board 6.1 -- try to use mult-boards even on off-market to make things cleaner when going through attorneys since they're used to them.
Similar language exists in 6.1. Look at Para 26. We (agent, lawyers & client) forced the escrowee to execute Para 26 a). There's still a chance the seller will object in writing and this will end up in court where the seller will lose and be forced to pay buyer's attorney and court costs.
Have an off-market house we were supposed to close on 4 months ago. The seller was the one who contacted us to sell, then he randomly goes MIA so we never close on his house.
Clearing up the books and go to get the 1k earnest money back and the title company tells me we need his signature to release it.
The seller didn't have an agent and the attorney who represented him is adamant he doesn't represent the client anymore -- sounds like they had a falling out. My attorney is working on it, but it doesn't sound good. Either need his signature or a court order.
Anyone have something similar happen?
It's happened to us before on our own deals but always eventually got the $ back.
We do have a situation now with a client who had to kill a deal during the inspection period. It was a listed, not an off-market deal, and the seller would not sign the release of the EMD. Everyone, the attorneys on both sides & the seller's agent, agreed that our client should receive his EMD back but the seller would not release it. Because this was a listed deal we used the standard Illinois 7.0 contract. There's a clause in the contract where the holder of the EMD can release has the ability to release the funds back to the buyer if there's an impasse. We're forcing the holder of the EMD to execute that clause, which he is. The seller has 14 days to object to the execution of the clause but we're forcing the issue.
That's good info Crystal. I ran into a similar situation in MO - deal fell apart, seller would not release $3K earnest money. Until I called his agent and threatened legal action, that is. Which I hated doing, but I hated being out of pocket the $3K more. Wouldn't it be nice if we could all just get along?
I wonder if MO has a similar clause as the one you speak of.
I'm not licensed in MO so I can't help you out, but there are probably some MO Realtors on the forum that can find out.