Seller refusing to release earnest money

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Seller refusing to release earnest money

James ThomasPro Member
Architect · Washington State · Member since 2022 · 13 posts · 10 votes

We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?

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John Clark
Member since 2018 · 1k+ posts · 1k+ votes
1y
Quote from @James Thomas:

We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?

My question is simple: How could you have not known that the seller hadn’t signed the inspection extension? Who told you that it had been signed?
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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    1y
    Quote from @James Thomas:

    We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?


     Your agent should have had the contract rewritten to accommodate the seller's issues. There is certainly some arbitration or appeal process in your state and that would likely prevent them from selling to anyone else until it is settled, so I would look into that process. 

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  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 979 posts · 643 votes
    1y

    Hi @James Thomas, Yes you may have a strong argument for implied consent, but how you proceed depends on the exact language in your purchase agreement and your state’s laws.

    If the seller allowed the inspection to move forward after the original deadline especially if they gave access to the property or coordinated with the inspector, many courts and arbitrators would treat that as “waiver” of the original date or “implied consent” to the extension. The fact that the seller didn’t object at the time, and only raised the issue after you cancelled, could work in your favor because it suggests bad faith. In contract law, when one party behaves in a way that reasonably leads the other to believe the agreement is still in force under the new terms, that behavior can override a missing signature in certain situations.

    The next step is to document everything (emails, texts, inspection scheduling confirmations, proof the seller granted access, and any communications with the agents.) Then, review your purchase contract to see what it says about earnest money disputes and dispute resolution (many require mediation or arbitration before going to court). In most states, escrow agents are required to hold the funds until both parties sign a release or a court/arbitrator orders it. If you can show the seller actively participated in or allowed the inspection after the deadline, your attorney can argue that the inspection contingency was still valid when you cancelled, making you entitled to the earnest money.

    It’s worth having your real estate attorney send a demand letter to the escrow company and the seller citing your timeline, the implied consent doctrine, and the seller’s cooperation in the inspection. Sometimes, a formal letter is enough to get them to release the funds without a costly fight. If they refuse, you may need to follow the dispute process in the contract, which could mean arbitration, small claims, or civil court depending on the amount at stake.

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  • Steven Spencer
    Real Estate Agent · OK · Member since 2023 · 19 posts · 11 votes
    1y

    I am not an attorney so I cannot give legal advice but I can give you some feedback from a Realtor’s perspective on how these situations are typically handled in Oklahoma.

    First I would suggest talking with your agent and their broker right away. Earnest money disputes here usually go through the dispute resolution process in the contract which often means mediation before anything can be released.

    Have your agent gather any written communication about the inspection extension such as emails, texts or even showing confirmations that show the seller knew about and allowed the inspection to take place after the original deadline. Even without a signed extension their actions might be considered implied consent but that would ultimately be for mediation or a court/arbitrator to decide.

    From here your broker can work with the title company and if needed file for mediation to try and get the earnest money released. If that does not resolve it you may want to consult an Oklahoma real estate attorney to explore next steps.

    1Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    1y

    I wonder if this will fall on your agent, I would have a call with them and the broker. Your agent should have verified it was signed. They needed to be on the ball and kept you protected so this wouldn't happen. If the seller refused to send to you then you would cancel prior of the first deadline. I have made this mistake before and I had to reimburse my client. 

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    • James ThomasPro Member
      OP
      Architect · Washington State · Member since 2022 · 13 posts · 10 votes
      1y

      @Caleb Brown. Our realtor did not realize it had not been signed and the seller's realtor didn't notify her either. 

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    • Caleb Brown
      Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
      1y
      Quote from @James Thomas:

      @Caleb Brown. Our realtor did not realize it had not been signed and the seller's realtor didn't notify her either. 


       That falls on your agent then. They have to be on top of paperwork and deadlines. 

      3Reply
    • James ThomasPro Member
      OP
      Architect · Washington State · Member since 2022 · 13 posts · 10 votes
      1y

      @Caleb Brown She has not offered to take an accountability or to makes us whole. Not sure I have any recourse with her either other than to fire her.

      1Reply
    • Joe S.Pro Member
      Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
      1y
      Quote from @Caleb Brown:

      I wonder if this will fall on your agent, I would have a call with them and the broker. Your agent should have verified it was signed. They needed to be on the ball and kept you protected so this wouldn't happen. If the seller refused to send to you then you would cancel prior of the first deadline. I have made this mistake before and I had to reimburse my client. 

       I have made this mistake before and I had to reimburse my client.

      I’m not in Kansas City, but if anyone is near Kansas City and reads this, I would suggest they work with you or someone like you for the very fact that you take responsibility. It appears the sellers thought they had a real life Buyer and now the buyer doesn’t want to buy and buyer wants to get their earnest money back.  

      1Reply
    • Caleb Brown
      Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
      1y
      Quote from @James Thomas:

      @Caleb Brown She has not offered to take an accountability or to makes us whole. Not sure I have any recourse with her either other than to fire her.


      I would push harder, talk to her broker. The agent can't deflect blame, she did not represent your best interests. She failed and assumed things instead of getting the extension signed in writing. She should have disclosed not having the signed extension prior to the deadline and the risks of your EMD. Mistakes happen but she assumed and it bit her. Also the amount lost would dictate how crazy you take it.

      2Reply
    • Caleb Brown
      Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
      1y
      Quote from @Joe S.:
      Quote from @Caleb Brown:

      I wonder if this will fall on your agent, I would have a call with them and the broker. Your agent should have verified it was signed. They needed to be on the ball and kept you protected so this wouldn't happen. If the seller refused to send to you then you would cancel prior of the first deadline. I have made this mistake before and I had to reimburse my client. 

       I have made this mistake before and I had to reimburse my client.

      I’m not in Kansas City, but if anyone is near Kansas City and reads this, I would suggest they work with you or someone like you for the very fact that you take responsibility. It appears the sellers thought they had a real life Buyer and now the buyer doesn’t want to buy and buyer wants to get their earnest money back.  


       Exactly. Agent made an assumption. You can't take peoples word, always have things in writing. I have made dumb mistakes as an agent but take accountability and move on

      1Reply
  • John Clark
    Member since 2018 · 1k+ posts · 1k+ votes
    1y
    Quote from @James Thomas:

    We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?

    My question is simple: How could you have not known that the seller hadn’t signed the inspection extension? Who told you that it had been signed?
    3Reply
    • James ThomasPro Member
      OP
      Architect · Washington State · Member since 2022 · 13 posts · 10 votes
      1y

      @John Clark No one told us it had been signed. And no one told us it hadn't been signed. 

      0Reply
    • Joe S.Pro Member
      Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
      1y
      Quote from @John Clark:
      Quote from @James Thomas:

      We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?

      My question is simple: How could you have not known that the seller hadn’t signed the inspection extension? Who told you that it had been signed?

      John,

      Sometimes you say what I think. Lol.

      0Reply
    • John Clark
      Member since 2018 · 1k+ posts · 1k+ votes
      1y
      Quote from @James Thomas:

      @John Clark No one told us it had been signed. And no one told us it hadn't been signed. 


       Ah, you made the mistake of trusting someone and not verifying independently everything. An understandable faux pas, but a faux pas nonetheless.


      In the future, take to heart what my wife’s friend said: “The last time I trusted someone, I had twins.”

      0Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    1y
    Quote from @James Thomas:

    We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?

     How much earnest money are you talking? If we’re talking to huge amount of earnest money, I can understand you wanting a portion of it back. If we’re talking chump change earnest money I’d probably just say forget it, especially if I tied up the Property for a long period of time.  I can understand your frustration, especially if the realtor was your guiding light and they drop the ball, which is what seems happened…


    Also how long did you keep the property under contract?

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  • Gustavo Delgado
    Houston, TX · Member since 2015 · 261 posts · 170 votes
    1y

    I think your agent dropped the ball not getting the signed extension before proceeding. Speak with your agents broker and demand EM. If they do not want to make you whole, get an attorney involved and 9/10 they will get your money.

    2Reply
  • Tony Bacon
    Member since 2025 · 71 posts · 27 votes
    1y

    See what the lein is for. If it's just an irritated contractor, a settlement with them is likely small. 

    If its a bank lein and theirs equity you can settle it at closing or just make them pay it. 

    Idk, depends on what the lein is. 

    0Reply
  • Ying Tang
    Member since 2025 · 318 posts · 119 votes
    1y

    Agents and brokers could/should have insurance for these types of things. Go after everyone who has money, and they can settle among themselves. Report to local associations and go to arbitration maybe. If seller let you inspect after the inspection period, and your agent specifically communicated with them, even if they did not sign, I would think they are reliable. 

    0Reply
  • Ying Tang
    Member since 2025 · 318 posts · 119 votes
    1y

    @Account Closed In states like Arizona, agents file the extension paperwork.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    1y
    Quote from @James Thomas:

    We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?


     There is no such thing as implied consent in real estate. The Statute of Frauds, which exists in all states, and eminates from thr 1677 English Act, requires that contracts for real estate must be in writing.

    So there was no extension of your inspection contingency because there was no written agreement extending it. So you missed your deadline.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    1y
    Quote from @Account Closed:
    Quote from @James Thomas:

    We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?


     Who filed the extension? I assume the attorney sent it to the seller's attorney (In New York and Connecticut, the extensions are filed by attorneys, not real estate agents. 

    Real estate agents are not usually lawyers, so they would most likely not review the legal documents outside of the offer/acceptance submitted to the other party).  Therefore, the error seems to be on the attorneys, not the agents.  

    In theory, you CAN sue the brokers, but this is a contract law issue. So, it wouldn't go far through their EO.  It would most likely be denied and thrown back on the attorneys for not handling the paperwork correctly.

    TLDR: Attorney error, not agent error (it seems after re-reading).


     Attorney states are the exception, not the rule. The majority of states do not have attorneys involved in the transaction in the sense you are used to. Most attorney states are in the northeast. In the majority of states, agents are handling contracts, and they are standardized forms provided either by Realtor associations or state real estate commissions.

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    1y
    Quote from @Account Closed:

    In my area(which I assume is similar to this)it would be with the agent. Title companies have no bearing on the inspection period and will only release EMD once everyone signs a form agreeing where and for what amounts the EMD is going. It would sit till everyone agrees on releasing it

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    1y
    Quote from @Account Closed:
    Quote from @Russell Brazil:
    Quote from @Account Closed:
    Quote from @James Thomas:

    We were under contract for a property and the seller went into arbitrage due to an unknown lien on the house. We filed an extension for the inspection so they could figure it out. When that cleared, we completed the inspection. The house had some significant electrical issues, so we decided not to move forward. After we cancelled the contract, we found out the seller had never signed the inspection extension and are now refusing to release the earnest money. Do we have any recourse here? They still allowed the inspection past the original date. Would that be considered implied consent?


     Who filed the extension? I assume the attorney sent it to the seller's attorney (In New York and Connecticut, the extensions are filed by attorneys, not real estate agents. 

    Real estate agents are not usually lawyers, so they would most likely not review the legal documents outside of the offer/acceptance submitted to the other party).  Therefore, the error seems to be on the attorneys, not the agents.  

    In theory, you CAN sue the brokers, but this is a contract law issue. So, it wouldn't go far through their EO.  It would most likely be denied and thrown back on the attorneys for not handling the paperwork correctly.

    TLDR: Attorney error, not agent error (it seems after re-reading).


     Attorney states are the exception, not the rule. The majority of states do not have attorneys involved in the transaction in the sense you are used to. Most attorney states are in the northeast. In the majority of states, agents are handling contracts, and they are standardized forms provided either by Realtor associations or state real estate commissions.

    Fair enough and good to know.  With that said, there could be a claim against the agents AND possibly the title company.  


     I dont see any claim against the title company. Looks like his buyers agent, if he used one was incompetent, so maybe against them.

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    1y

    I think it could be considered an implied extension depending on what they said. I'm no attorney but that would really be a close one. That being said, your agent might be at fault. They absolutely should have informed you about this and if they didn't, I think they would be liable.

    I might ask an attorney, but depending on what they say, I'd probably lean toward something like asking them to split it otherwise you'll take it to small claims court. I think they would rather split it and feel OK about that than even have to deal with the hassle of small claims court. 

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  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    1y

    let me guess, no agent involved.  that earnest money needs to sit in some sort of trusted escrow. 

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  • James ThomasPro Member
    OP
    Architect · Washington State · Member since 2022 · 13 posts · 10 votes
    1y

    The earnest money is only $1000, so we decided it's not worth pursuing it. The seller did agree to refund 30%, so that's something. Broker said we don't have a leg to stand on since the extension wasn't signed. Agent admitted that she dropped the ball and said she's sorry, but that's it. We will obviously not be working with this agent moving forward.

    1Reply
    • Tony Bacon
      Member since 2025 · 71 posts · 27 votes
      1y
      Quote from @James Thomas:

      The earnest money is only $1000, so we decided it's not worth pursuing it. The seller did agree to refund 30%, so that's something. Broker said we don't have a leg to stand on since the extension wasn't signed. Agent admitted that she dropped the ball and said she's sorry, but that's it. We will obviously not be working with this agent moving forward.


       lol "oops, sorry I lost you money" 

      Many such cases in this industry 

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