What if I don't sign cancellation and release of escrow?

Question

Somebody put an earnest deposit down, then backed out. I had to take it off the market and had realtors refuse to "waste their time" showing the property because it was pending under contract. The buyers agent wants me to sign a release of escrow back to the buyer.

What if I don't sign it? Can I keep it? Shouldn't I be compensated for them having me take the property off the market?

Ned Carey · Answer

Lots of good points here but the most important to you and anyone else reading along:

Read the contract!

The contract is what determines what happens in a default. Not all contracts are the same. Although in most areas Realtors will use a  common realtor created contract. Even these realtor contracts vary from area to area.  If you are entitled to keep the deposit then you may have to go to mediation to get it.

Account Closed · Answer

You probably will have to go to mediation and if he has a smart lawyer will file lis pendens on property if mediation doesn't work out with a ton of legal fees

Jay Hinrichs · Answer

in our area we simply open escrow with title company B and close... EM squabbles happen all the time.. you do need both buyer and seller to sign release other wise title company wont release.. you can then go to mediation about it.. but it cant hold up a closing in our area.. at that specific title company yes.. but like I said we just go to brand B and close there..

Wayne Brooks · Answer

Sounds like you are new to this.....your contract had very specific conditions that allow the buy to back out and receive their EM back. Primarily, an inspection period which in FL realtor contracts gives them the right to cancel without having to give any reason whatsoever.

You don’t get to keep it simply because you want to. Read your contract and listen to your agent, but I’m sure they’ve already explained this to you.

Russell Brazil · Answer

Im unfamiliar with Florida, but in Maryland if the EMD does not get released, then typically the buyer will not release the contract on the property. Without the contract being released, then title insurance wont be issued for the property if a title attorney is aware of the unreleased contract. So essentially the property cant be sold.

Brian Pulaski · Answer

What does your contract say? Why did they "back out"? Almost all normal contracts have plenty of ways for the buyer to "back out". The answer is I don't know your contract but I'm 95% certain that you cannot keep his EMD. Welcome to the business of flipping/selling houses. I'm on month 3 of a sale, because the title company waited a month and a half to pull a municiple search, that takes the city another month to actually do!

Tom Gimer · Answer

FAR contracts directly address this situation. If there is a dispute about who is entitled to the EMD -- which sounds like the case here -- the escrow agent (often the title company) will wait for joint instructions from the parties. If that doesn't happen, they will interplead the funds into court where the parties can fight over them.

That said, I agree with @Wayne Brooks ... if the buyer had a right to bail you'll end up losing more than the EMD on this one.

What if I don't sign cancellation and release of escrow?

Most Popular Reply

Read the contract!