REALTOR will not give earnest money back????? - Posted by Ray S(FL)

Posted by Hugh James on May 05, 1999 at 10:31:01:

Honestly, I don’t know. I’m guessing that the lister came to some reasonable settlement with the bank (the seller) because it appears they let him relist the property. This really shouldn’t be that hard a sale for him and now they are truly motivated sellers, so he’ll have a decent commission coming especially if there’s no split. This bank has a fairly sizeable REO portfolio (I’m told) and I was surprised that he would risk what is apparently his long standing relationship with them for a fairly small amount of money. I suspect he may have grown a little complacent about his clout and needed a reality check. The silver lining is that the bank has agreed to fax us future REO listings when they’re ready for market – as long as the property is four units or less (not a commercial grade loan).

REALTOR will not give earnest money back??? - Posted by Ray S(FL)

Posted by Ray S(FL) on May 02, 1999 at 18:22:54:

I am having a bit of a situation w/ a REALTOR. I signed a contract for a property on the 31st of March and gave the REALTOR an earnest money deposit of $1,500. (this was after we had come to terms w/ the seller) In the contract we had 7 days to complete inspections, our only contingency. We Completed our inspections and decided to move forward w/ the purchase. The REALTOR even calls us and tells us to fax over a letter saying that all the contingencies had been satisfied. We did. 2 weeks go by and we assume that the seller is preparing to close the transaction. We go on a mini vacation and return w/ a message on the answering machine that the seller needed some kind of proof of funds letter before they would even sign the contract. This was on the 22nd of April.

After much confusion perpetuated by this REALTOR we decided to back out of the deal since they were not going to sign the contract until we produced a letter to prove the funds.
We faxed a letter to the REALTOR withdrawing our offer on the bassis that the seller had not signed the agreement and we were told from the beging that the seller had signed the agreement.

The REALTOR tells us that is “fine”, “she understands”. We faxed the letter over a week and a half ago. We have not seen or heard from her as to our earnest money deposit. I call the REALTOR yesterday and she tells me that she can not release the deposit until she receives the original contract back from the seller proving that they didnot sign it. I told her that she had lost her mind and that she better have a check for me by Tuesday. Proof that the seller had not signed??? She told us that the seller did not sign. Even after we faxed the letter withdrawing she said they had not signed.

Someone, please give me some guidance on this one.

Thanks in advance,

Ray S

Re: REALTOR will not give earnest money back??? - Posted by Sandy FL

Posted by Sandy FL on May 03, 1999 at 11:56:36:

Not sure what area of Fla you are in, but if it is the Ft Laud-Miami area, I would be all too happy to recommend a couple of good RE atty’s to you.

Lets hope you don’t need one. Please update us here with regards to what happens with this.

Sandy FL

Re: REALTOR will not give earnest money back??? - Posted by JPiper

Posted by JPiper on May 02, 1999 at 20:35:36:


There seem to be a few “irregularities” here.

First, my contract states that the earnest money is to be held undeposited until acceptance of the offer, at which time it would be deposited at such place as set forth in the contract within XX number of days. Depositing the earnest money without an accepted contract would be “irregular” here. I’d check my contract and see what it says.

Next, unless the contract provided for “proof of funds” this could only be requested through a counter-offer. In other words, if the seller had a requirement which was not contained in your original offer (proof of funds), then this requirement in essence rejects your offer and makes a new counteroffer?.thus proving that the original offer had not been accepted. Again, check your contract.

Your offer may be terminated at any time prior to it’s acceptance. However, it sounds as if you and the Realtor are doing everything verbally. I would immediately terminate this contract in writing, and deliver this termination to the broker (have him sign a receipt), demanding the return of my earnest money. The seller can’t accept your offer then pose a new condition on you (unless this was already in your offer). If the broker does not immediately return your earnest money then I would contact the State regulatory agency and the Board of Realtors, along with my lawyer.


Re: REALTOR will not give earnest money back??? - Posted by JohnBoy

Posted by JohnBoy on May 02, 1999 at 19:57:37:


I don’t have anything to add to what the other posts said about getting your deposit back. My question is, why did you even bother going through with your inspections and sending a letter to the realtor stating that all your contingencies have been meet BEFORE you even had a copy of the signed contract from the seller?

Technically your 7 day inspection clause isn’t even effective until the date that the seller signs the contract. Your releasing your contingency without even having a contract on the property.

I do have another question on this? If you signed off that all your contingencies have been meet, then why do you have a problem with showing proof of funds at this point?

For future reference here are a few things you might want to consider to prevent this kind of a problem.

Only agree to put up the earnest deposit upon the sellers acceptance of your offer. This means you don’t hand over any deposits until after the seller accepts the offer and signs the contract. The realtor then hands you a copy of the contract signed off by the seller at which time you then put up the earnest deposit.

Consider having a clause in your contract or an addendum if your using a realtors contract, that the earnest deposit is to be held by a 3rd party. You can try to get it where your attorney will hold the earnest deposit or otherwise have it set up that escrow will open and all monies shall be held by the title company until closing. This keeps the realtor from controlling your money.

Also have strict instructions on how the earnest deposit is to be distributed in the event the sale falls through. Then the title company will be the one to distribute those funds and it keeps the realtor away from controlling the money.

When submitting an offer, always put a time frame in which the seller has to accept your offer or the contract becomes null & void if not accepted by that date and time. I usually give 24 hours unless it’s on a weekend, then I’ll extend it until that following Monday or Tuesday at the latest. Within 24 - 72 hours you either have a deal or you don’t. This prevents the seller or the realtor from holding things up and puts a signed contract in your hands within hours instead of days or weeks and then resulting in a deal that falls through on you.

Re: REALTOR will not give earnest money back??? - Posted by Rob FL

Posted by Rob FL on May 02, 1999 at 19:00:54:

I would follow the Karl and Charles advice, but in addition I would go to the real estate office and speak with the salesperson and/or his broker in person. I would make sure he knew that I was not leaving with the deposit. If all else fails I would report him to the state licensing board as well as the local board of realtors and then contact an attorney.

Re: REALTOR will not give earnest money back??? - Posted by charles in delaware

Posted by charles in delaware on May 02, 1999 at 18:55:25:

The realtor is waiting for a “release” from the seller to allow you to be released from the contract. HOWEVER, since the seller NEVER signed the contract there should be no need for a release.

Call the realtor and clearly make him/her understand there is no need for a release and that you want your deposit money backin X number of days. Threaten and cajole. Ask to talk to the managing broker. Threaten to take a full page advertisement in a local paper relating your difficulties with this realtor. Lastly, get an attorney friend with a pitbull/ loud voice to call and harass the realtor (believe it or not this works magic).

do not get too frustrated. this is unfortunately part of real estate sometimes.

Adjust the agent’s attitude! - Posted by Karl Grube

Posted by Karl Grube on May 02, 1999 at 18:48:26:

Begin by discussing the problem with the Real Estate Broker of the firm. If unsuccessful, consult a real estate attorney. Today, all realtors carry insurance, thus most attorneys are willing to take your case.

Re: REALTOR will not give earnest money back??? - Posted by Hugh James

Posted by Hugh James on May 04, 1999 at 15:13:50:

JPiper is right on the mark on this one. My 2 cents is that I would give this Realtor notice in writing and in person that (s)he has 24 hours to deliver up a refund check or it’s off to the state boys we go. It’s not the easiest thing you’ll do all day (and it’s a sad commentary on our society) but a letter from the state auditiors works wonders when it comes to attitude adjustment. As JPiper knows we were fighting for a $4,000 earnest money refund for a month. We filed a complaint with the state (Illinois) and in less than a week the check came floating home just because the letters went out to all concerned from the bureaucrats. It was like watching OSHA in action at a construction site. Good luck!

Thanks - Posted by Ray S(FL)

Posted by Ray S(FL) on May 02, 1999 at 21:24:06:


Thanks for the response.

I am checking the contract to see what the verbage is as to earnest money and the acceptance in the A.M. (don’t have the contract in front of me.) On the other issue of proof of funds I have read the contract 3 seperate times and there is nothing in the contract requiring “proof of funds”. The seller would not even sign the contract until we showed proof of funds.

Next, we have whithdrawn the offer and requested our deposit back Thursday was a week ago. We did this in writting and the REALTOR called to tell us she would get it back to us ASAP. Only after we contacted her yesterday and asked were the deposit money was did she come up w/ this “needing proof that they did not sign” junk.

I appreciate the advise and in the future I will not give an earnest money deposit until I receive a signed copy of the contract from the sellers. Then the money will go to my attorney’s office instead of to the realtor.

Thanks Again,
Ray S

Re: REALTOR will not give earnest money back??? - Posted by Ray S(FL)

Posted by Ray S(FL) on May 02, 1999 at 21:37:59:


I agree w/ everything you say. The reasoning behind going through w/ the inspections was that the REALTOR told us some story about how it took so long to get the sellers to respond because they are located in Utah. She suggested that we go ahead and do the inspections. I knew that the effective date of the contract was not until ALL parties had signed and thought this might give me a little extra time if I needed it. Hind sight being 20/20 I should have pressed her for the signed copy on a daily basis.

I did not have a problem showing proof of funds after the inspections were done. I had a problem after we signed the contract 2.5 weeks earlier and had no signed contract by the seller. “Proof of funds” were not mentioned until 2.5 weeks after we had originally signed the contract, done the inspections and were ready to close. There is no mention anywhere in the contract for “proof of funds”. I mean the smart thing to do here would be to sign the contract and then hope I can’t close. What do you think?

Thanks for the response and I will do it differently next time.

Ray S

Re: REALTOR will not give earnest money back??? - Posted by Ray S(FL)

Posted by Ray S(FL) on May 02, 1999 at 21:39:33:

I am there first thing in the A.M.

Ray S

Glad to hear it! - Posted by Mark R in KCMO

Posted by Mark R in KCMO on May 04, 1999 at 18:10:12:


I’m glad to hear that your situation was resolved.

Go get the next one!

Mark R in KCMO

Re: REALTOR will not give earnest money back??? - Posted by JPiper

Posted by JPiper on May 04, 1999 at 17:19:53:

Congratulations on getting your earnest money back! I’d be interested in knowing what transpired with the remainder of the $10K earnest money…if you happen to know.