Posted by Robert Staats on September 20, 2003 at 09:20:03:
Hi Lily:
Your best bet is always to present the earnest money check at the same time your offer is “accepted” (seller signs it, making it a contract). Don’t hand a check over at the time an offer is merely presented. Even though you may add some language in the offer that refers to cashing the check equating to acceptance, a dishonest seller could cash your check and then plead ignorance about your offer since the seller never accepted/signed it. Of course if the seller were very dishonest, he/she could cash your check anyway and run - hence it’s a good idea to have an escrow agent or reputable real estate agent hold the check.
You also mentioned that the seller may not understand the contract since he/she does not speak English. You may want to see a lawyer, since I’m not sure you even have a legally enforceable contract if the seller can legitimatley claim that he/she had no way of knowing what it said and instead they claim they relied on your verbal instructions which can of course be subject to disagreement later. All of this is dependent on how much you can trust the seller, but in my experience you want to rely on more than trust.
Posted by Lily Henderson on September 19, 2003 at 01:29:24:
I should’ve read Mr. Bronchick’s advice on putting the earnest money deposit into an escrow in the Flipping Properties book. Since it’s too late to do that, I would appreciate some damage control advice.
In getting attention of seller, who doesn’t have an agent, I attached a $1000 check with contract. My understanding is that if he were to cash it then offer is accepted by him. Now, if I can’t get financing after 45 days and walk away then technically I didn’t default on the contract based on the financing contigency, right? But this wouldn’t
make any practical sense since the seller could justify that the property was held for 45 days. Now what? By the way, I did insert most of the pro-buyer clauses. Also for future reference, what clause/phrase should I insert in regard to earnest money assuming that I don’t put it in escrow?
If this question has been answered before I apologize for repeating. Please point me to the link/message if that’s the case. Much thanks!
Re: Earnest money deposit - Posted by Robert Staats
Posted by Robert Staats on September 19, 2003 at 09:56:33:
Hi Lily:
Was your offer actually accepted? The seller should have signed the contract to indicate his acceptance, not just cashed the check. Assuming this, and assuming that the contract referred to the $1,000 earnest money, and assuming that the contract was contingent of obtaining the financing, and assuming you make a good faith effort to get the purchase financed, then you should get your $1,000 back, regardless of your tying up the property for 45 days. That is a risk the seller takes when accepting your offer.
However, the other issue is whether you need to sue the seller to get your earnest money back - hence the need generally for an escrow agent or at least a reputable real estate agent holding your earnest money. I have no idea how honest the seller is in your case. If he balks at refunding the money, you may need to see a lawyer.
Re: Earnest money deposit - Posted by Lily Henderson
Posted by Lily Henderson on September 19, 2003 at 17:09:33:
Hi Robert,
The seller cashed my check and I will meet him for his signature on the contract tomorrow. I don’t think he is a dishonest seller, it’s just he doesn’t know how all these works. He is a none english speaker person and has trouble understanding the contract. Next time should I insert a clause stating that once the check is cashed offer is accepted? Or is this a commonly known rule for sellers? Which is a stronger indiciation for accepting offer, cashing the check or sign the contract? Or should they happen at the same time?