Earnest Money Refund on Verbal Purchase Agreement - Posted by Janae in Wisconsin

Posted by gloria on August 15, 2003 at 21:15:05:

entered in verbal agreement to buy lot with two homes we pay 750.00 for the house we live in and rent the other house for 450.00 mo to pay the payment of 1,200 mo that was in march 2001, we still have not signed any contract as promised by the owner ,on the recipts he writes rent to purchase from 3-1-2001 to 3-1-2022 now he is backing down on agreement, anthing i can do please some advice

Earnest Money Refund on Verbal Purchase Agreement - Posted by Janae in Wisconsin

Posted by Janae in Wisconsin on July 15, 2003 at 16:31:32:

HELP!!! In Nov. 2002, my husband and I entered into a “verbal purchase agreement” on a single-family home. We gave the owner/seller $5,000.00 earnest money (personal check) showing our earnest intent to buy the home in May 2003 for $189,000.00. This arrangement worked well for the seller as he was looking to re-invest the money from the sale into another home and needed time. We then signed a Residential Lease Agreement w/ monthly rent at $850.00 and security deposit of $850.00 and have lived in this home since November. The agreement was month-to-month with a rider attached stating that the home would be “placed on the market” in May 2003 and that we would have first option to purchase the home. We began looking for financing in March 2003…found financing…appraisal came back at only $160,000.00. The seller is upset that the real estate market is “soft” and the house does not appraise for the asking price of $189,000. Our lender, as you may have guessed, will not loan $189,000 on a home valued at only $160,000…seller WILL NOT negotiate on price…therefore we CANNOT obtain a loan on this home.
NOTE: During the time we have been living there we have made numerous improvements to the property…about $3,500.00 worth…which we understand will have to walk away from. (We were overly optimistic!) Seller is now refusing to refund our earnest money…says we “delayed” a “real sale” on the home…and he could have made his money sooner. HELP!! Seller has an attorney…is trying to confuse the matter…but I believe we should get our earnest money back as we acted diligently and in good faith in attempting to purchase the home.

Re: Verbal Purchase Agreement - Posted by John Merchant

Posted by John Merchant on July 15, 2003 at 21:23:13:

You’ve shown just how worthless any oral agreement is as per RE, so don’t depend on getting your money back.

I can’t conceive of any court honoring any oral deal on RE.

Your only leverage as far as I can see is to simply stay there, continuing your same payment/rent schedule and wait for the seller’s next move. As the old saying goes, possession is a lot of the law and it’s gonna take seller some bucks to get you out of there; meaning it could just prove cheaper for seller to negotiate with you eventually…than to formally evict you as squatters, which would require an attorneys fee and court costs.

Re: Verbal Purchase Agreement - Posted by Janae in Wisconsin

Posted by Janae in Wisconsin on July 16, 2003 at 08:41:51:

Thanks for your assistance. Would a court, say…a small claims court be a possible avenue for us to retrieve our $5,000.00. We did not recieve any services or merchandise for this money…wouldn’t that hold up? We don’t mind moving out and as a matter of fact, would prefer to leave this situation behind us…but would just won’t leave without the earnest money being returned.
Hypothetically…how long do you suppose we could “squat” there before being formally evicted? And will that “formal eviction” show up to haunt us in the future (appear somewhere on our credit report or any other record?) We have two teenage boys and I hate to put them through anything too ugly/traumatic. The seller now wants to increase our rent and have us sign another 6 month lease. He states that “maybe this will allow us to come up with more money or find someone who will finance a larger amount on the home”. We DON"T want to sign another lease…so squatting IS a viable option as long as it won’t scar us for life. Much appreciation for your help!!!

Re: Verbal Purchase Agreement - Posted by Nate(DC)

Posted by Nate(DC) on July 16, 2003 at 21:16:11:

The problem is, you have no written evidence of why you gave this man $5000, and since a verbal agreement to buy or sell real estate is unenforcable in every state in the U.S., it would be hard for you to claim that he breached the contract, or that the contract had some sort of financing contingency. I don’t know that legally you DO have a claim to the money. I think John’s advice is best - just try to make things as tough as possible for the seller, as long as possible - don’t sign his new lease, don’t cooperate with him, etc. - so that he’ll feel like he’ll do anything for you, just to get you to move out. At this point you do not have the upper hand, legally, and you may never, so you have to try to regain the upper hand practically.