Buyer?s deposits as liquidated damages to seller.

W

Wesley_IHB

New member
A property I opened escrow on kept having issues after issues with the latest problem about water heater not complying with city/county code. Since this property is not ready for a sale as evident in the water heater issue, it's not worth to spend more time & effort on it as there may be more problems from it being a rental property. The renters didn't move out until a couple days ago.



Now the sellers are advising escrow to release the deposit to them since they say we signed liquidated damages on the Purchase Agreement. I haven't signed contingency removal & according to item 14C2 on the purchase agreement (Continuation of Contingency), it should be a simple cancellation with buyer deposit remaining intact. My realtor prepared document showing that my deposit should return to us accordingly.



Anyone here has any knowledge on this matter?



Thanks!
 
[quote author="Wesley" date=1259647263]A property I opened escrow on kept having issues after issues with the latest problem about water heater not complying with city/county code. Since this property is not ready for a sale as evident in the water heater issue, it's not worth to spend more time & effort on it as there may be more problems from it being a rental property. The renters didn't move out until a couple days ago.



Now the sellers are advising escrow to release the deposit to them since they say we signed liquidated damages on the Purchase Agreement. I haven't signed contingency removal & according to item 14C2 on the purchase agreement (Continuation of Contingency), it should be a simple cancellation with buyer deposit remaining intact. My realtor prepared document showing that my deposit should return to us accordingly.



Anyone here has any knowledge on this matter?



Thanks!</blockquote>


From what it sounds like, your description of your situation appears to favor you getting your full deposit back.



However, depending on the interpretation of the entire contract, and how it was written, sellers may still have grounds to receive some amount, <strong>even without the contingencies having been actively removed</strong>.

Sellers would have to prove that (1) you were not dealing in good faith, and that (2) there were actual damages (which seems like it is possible since the current tenants have been moved out.) Difficult, but not impossible. If there is a dispute, it typically goes through mediation, and then likely binding arbitration, again depending on how your offer was constructed.



My recommendation is to work together with (and listen to) your realtor, who you have chosen to guide you through your transaction. Too many cooks in the kitchen spoils the soup, and he/she is the only person with the full details of what has transpired for you so far.



Good luck,

-IR2



***Also note - Once funds go into escrow, they do not come out without written instructions signed by both parties. Sellers can't just "take" the pot.***



Edit to add: I appreciate the PM, but as you are actively involved in a transaction with another broker, any advice that I could give you other than "work with your realtor" could be considered interference, possibly putting my license in jeopardy.
 
[quote author="Nude" date=1259650410]Ask a lawyer, not a bunch of internet nutjobs.</blockquote>
I resemble that remark.
 
I am already in contact with real estate legal advisors & the odds appear to be in my favor. I'll post the outcome later so all who undergo this same scenario will have something to refer by.
 
[quote author="Wesley" date=1259660085]I am already in contact with real estate legal advisors & the odds appear to be in my favor. I'll post the outcome later so all who undergo this same scenario will have something to refer by.</blockquote>
I'm guessing that you will get most all of all of your deposit back, but definitely keep us posted. Good luck!
 
[quote author="USCTrojanCPA" date=1259687792][quote author="Wesley" date=1259660085]I am already in contact with real estate legal advisors & the odds appear to be in my favor. I'll post the outcome later so all who undergo this same scenario will have something to refer by.</blockquote>
I'm guessing that you will get most all of all of your deposit back, but definitely keep us posted. Good luck!</blockquote>


Well... he better find the <a href="http://www.talkirvine.com/index.cgi">new site</a> to update us unless he gets an update this week.
 
Will post the outcome on www.talkirvine.com so that others can use it as reference --- although each & every case is different.



I have truly enjoyed reading some of the topics here & have picked up alot of info as well so definitely will share any experiences or knowledge in real estate. I know the information here is not official & tend to gear toward a specific situation, but even so it's another source of information.



Thanks all for the well wishes! Our lawyer are confident that there's no buyer's default & the seller's claim for liquidated damages is just that a claim.
 
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