I was under contract for a house, and all was well untill the sellers lawyer said that the security deposit must be given to the seller and not held in an escrow account. My lawyer told me this is insane because the seller could just walk away with the deposit monies. Or if the house gets damaged before closing than the seller could just walk away with the money.
Is this normal and or recommended? Btw its a probate sale that needs court approval
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
2y
Your attorney is correct and it should be held with the title agent in escrow. You and the seller have to agree to a contract which includes dates and appraisal/inspection if getting financing. The seller bears responsibility on the contract as well to deliver on their end.
Seller still has to hold up on their contract to deliver a property that will appraise and pass an inspection. Unless the property is being sold with no contingencies.
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
2y
Your attorney is correct and it should be held with the title agent in escrow. You and the seller have to agree to a contract which includes dates and appraisal/inspection if getting financing. The seller bears responsibility on the contract as well to deliver on their end.
Seller still has to hold up on their contract to deliver a property that will appraise and pass an inspection. Unless the property is being sold with no contingencies.
@Jason Wray this contract doesnt have those contingencies
its just that if the money is given directly to the seller, the seller could just walk away and not close. Or the house could get damaged before closing and I would loose alot of money.
No the money doesn't go to the seller, it goes to the seller's agent (or their company) who hold it in escrow. I'm guessing you aren't using any realtor's. Your lawyer is correct and the seller's lawyer should hold it for them if no agents are involved. At least in Canada, lawyers hold money all the time-when you buy a house and are in the process of closing, all of the cheques are made out to the lawyers who hold the money in their account until closing and then it goes to the seller.
I was under contract for a house, and all was well untill the sellers lawyer said that the security deposit must be given to the seller and not held in an escrow account. My lawyer told me this is insane because the seller could just walk away with the deposit monies. Or if the house gets damaged before closing than the seller could just walk away with the money.
Is this normal and or recommended? Btw its a probate sale that needs court approval
Of course not, the SD follows the tenant/ House. HOWEVER, when the times comes you tell the tenant, sorry I never got it, please contact the previous owner. This has happened to me many times
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
2y
In a standard real estate transaction, the security deposit is typically held in escrow until the closing to protect both parties involved. However, in probate sales, such as your situation, the court may have specific rules. The seller's lawyer requesting the deposit directly aligns with court instructions, ensuring compliance with probate sale legalities. While unconventional in regular transactions, probate sales, overseen by the court, operate under a different legal framework. The security deposit serves as a guarantee that the buyer will fulfill the contract, with potential forfeiture if they breach it. Consultation with your attorney is crucial to understand the probate court's requirements and protect your interests. Your attorney can review court orders, assess the appropriateness of releasing the deposit to the seller, and negotiate alternative arrangements if needed, such as placing the funds in a neutral account or involving a third party until the sale's closing.
@Jason Wray this contract doesnt have those contingencies
its just that if the money is given directly to the seller, the seller could just walk away and not close. Or the house could get damaged before closing and I would loose alot of money.
You are the buyer walk away unless you get what you want. Sellers change their mind when they realize they are being unrealistic. How long was the property on the market if it was sitting for months the ball in your court. When people walk away and the property has to be relisted its not a good sign for the seller.