Help needed... how do I get my deposit back?

A

akim997

New member
I went into an escrow on a house, and I recently dropped out of escrow since I couldn't get the loan to work out. 

My current house did not appraise well, such that I wouldn't be able to offset the current mortgage with rental income. 

I never signed off on the contingencies during escrow.  When I got the appraisal, I tried to challenge it to get a new appraisal, when that didn't come through I let the other party know the deal wasn't going to be able to happen. 

I thought the loan contingency was "an out" in which you could get back your deposit.  In addition, I didn't sign off on the home inspection contingency.  Rather, I asked for repairs, which were rejected.   

Now, the seller says they are going to keep my full deposit, and our playing games.  Arbitration, I am told, will cost about $3K and I can't get back the fees.  They may likely reject arbitration and force me to sue them to get the money back from escrow.  Does this happen often?   

It's been explained to me, that the sellers are having marital problems which unfortunately, isn't my problem at all.  I could care less what's going on, I just want my money back.  Can they do this?    I made sure I didn't sign off on all contingencies just in case something happened.    Now, the other realtor is saying "contingencies don't mean a thing, if you enter into escrow, that in itself is a BINDING contract and you MUST forfeit your deposit".    Is this true?  If so, why even have contingencies?
 
akim997 said:
I went into an escrow on a house, and I recently dropped out of escrow since I couldn't get the loan to work out. 

My current house did not appraise well, such that I wouldn't be able to offset the current mortgage with rental income. 

I never signed off on the contingencies during escrow.  When I got the appraisal, I tried to challenge it to get a new appraisal, when that didn't come through I let the other party know the deal wasn't going to be able to happen. 

I thought the loan contingency was "an out" in which you could get back your deposit.  In addition, I didn't sign off on the home inspection contingency.  Rather, I asked for repairs, which were rejected.   

Now, the seller says they are going to keep my full deposit, and our playing games.  Arbitration, I am told, will cost about $3K and I can't get back the fees.  They may likely reject arbitration and force me to sue them to get the money back from escrow.  Does this happen often?   

It's been explained to me, that the sellers are having marital problems which unfortunately, isn't my problem at all.  I could care less what's going on, I just want my money back.  Can they do this?    I made sure I didn't sign off on all contingencies just in case something happened.    Now, the other realtor is saying "contingencies don't mean a thing, if you enter into escrow, that in itself is a BINDING contract and you MUST forfeit your deposit".    Is this true?  If so, why even have contingencies?
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Have you spoken to your realtor and/or your realtor's broker?  They should be trying to protect your interests.  You may be foreced into arbitration and/or mediation by the seller since you went over the 17-day contingency period.  Also, the escrow company will probably want to hold back a certain amount like $500 for their time and energy spent on the file.  The listing agent is full of crap, don't listen to them.  You'll most likely have to give up a portion of your deposit to get the sellers to sign a cancellation of escrow form to get the money out of escrow.  Your deposit doesn't going fully at risk until you sign the Contingency Removal Form (they have it there for a reason), but you are stuck in limbo now.  The best thing to do is to maybe try to work something out with the sellers.  Good luck and keep us posted.
 
akim997 said:
I went into an escrow on a house, and I recently dropped out of escrow since I couldn't get the loan to work out. 

My current house did not appraise well, such that I wouldn't be able to offset the current mortgage with rental income. 

I never signed off on the contingencies during escrow.  When I got the appraisal, I tried to challenge it to get a new appraisal, when that didn't come through I let the other party know the deal wasn't going to be able to happen. 

I thought the loan contingency was "an out" in which you could get back your deposit.  In addition, I didn't sign off on the home inspection contingency.  Rather, I asked for repairs, which were rejected.   

Now, the seller says they are going to keep my full deposit, and our playing games.  Arbitration, I am told, will cost about $3K and I can't get back the fees.  They may likely reject arbitration and force me to sue them to get the money back from escrow.  Does this happen often?   

It's been explained to me, that the sellers are having marital problems which unfortunately, isn't my problem at all.  I could care less what's going on, I just want my money back.  Can they do this?    I made sure I didn't sign off on all contingencies just in case something happened.    Now, the other realtor is saying "contingencies don't mean a thing, if you enter into escrow, that in itself is a BINDING contract and you MUST forfeit your deposit".    Is this true?  If so, why even have contingencies?
Click to expand...

i was in a similar situation once (had to back out of escrow without having signed off on the 17 day contingency period).  Their real estate agent should have had you sign a notice to perform and if you did not sign it they could have canceled escrow and would have had to give you your deposit back. Since they did not give you a notice to perform, the 17 day contingency period gets extended until you sign off on it.  So legally you are entitled to your full deposit back, less any escrow fees (about 500 like USC said).

With that said, it sounds like you agreed to do arbitration and while you would win you will be out your 3K for arbitration costs. Im not sure if you would be able to take them to small claims to get the money you spent on arbitration.  If you think they are really going to f*ck you over and make you go to arbitration you may be better off negotiating with the seller and tell them you will give them some amount for their troubles (an amount up to what you would spend on arbitration) in exchange for the release of your deposit. I know its the principle of the matter but i would rather pay 2-3K, get my money back and move on. Then have to deal through the hassle of going to arbitration. Point out to them that they in fact will lose in arbitration and not only with they miss out on the 2-3K you would have given them but also have to pay for their fees, which would be another 2-3K.

Which raises another point, should buyers sign off on the arbitration clause in the purchase contract to begin with? I think most people blindly sign off on it without realizing what it really means.

good luck and keep us posted!
 
akim, sorry to hear.

We were in the same position few years ago, home inspection report came back with $10K repairs and sellers were not willing to pay for the repairs. I dont remember exactly whether it was over or under 17 days, but cancelled the escrow. Our agent helped us in the process to get our full money back, less that homeinspection cost that was separately paid. Ofcourse, then market was different - that seller could get another offer pretty quickly after we backed out.

I am not sure about arbitration. But you could ask your agent to get seller's number and talk to them directly (avoid what listing agent has to say). If you can not get to them, writing an email/letter to seller stating the reasons for your backout (give family/emotion touch) and make the bitter deal sweet for them - so that its win/win.

All the best!
 
akim997 said:
I went into an escrow on a house, and I recently dropped out of escrow since I couldn't get the loan to work out. 

My current house did not appraise well, such that I wouldn't be able to offset the current mortgage with rental income. 

I never signed off on the contingencies during escrow.  When I got the appraisal, I tried to challenge it to get a new appraisal, when that didn't come through I let the other party know the deal wasn't going to be able to happen. 

I thought the loan contingency was "an out" in which you could get back your deposit.  In addition, I didn't sign off on the home inspection contingency.  Rather, I asked for repairs, which were rejected.   

Now, the seller says they are going to keep my full deposit, and our playing games.  Arbitration, I am told, will cost about $3K and I can't get back the fees.  They may likely reject arbitration and force me to sue them to get the money back from escrow.  Does this happen often?   

It's been explained to me, that the sellers are having marital problems which unfortunately, isn't my problem at all.  I could care less what's going on, I just want my money back.  Can they do this?    I made sure I didn't sign off on all contingencies just in case something happened.    Now, the other realtor is saying "contingencies don't mean a thing, if you enter into escrow, that in itself is a BINDING contract and you MUST forfeit your deposit".    Is this true?  If so, why even have contingencies?
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A couple of questions:

1. How soon do you need that deposit back?

2. Does your (buyer's) broker have good legal backing/support services available?

-IR2
 
If he is not in a hurry to get his money back can't he just wait till they provide him a notice to perform and he does not sign it to get his money back?  The seller is just as stuck in limbo and cannot go into escrow with another buyer right?
 
davenlei said:
If he is not in a hurry to get his money back can't he just wait till they provide him a notice to perform and he does not sign it to get his money back?  The seller is just as stuck in limbo and cannot go into escrow with another buyer right?
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That would be correct, you can't open a new escrow until the first one is cancelled. 
 
davenlei said:
If he is not in a hurry to get his money back can't he just wait till they provide him a notice to perform and he does not sign it to get his money back?  The seller is just as stuck in limbo and cannot go into escrow with another buyer right?
Click to expand...

Close, but not quite accurate.

Correct.

-IR2
 
So
IrvineRealtor said:
davenlei said:
If he is not in a hurry to get his money back can't he just wait till they provide him a notice to perform and he does not sign it to get his money back?  The seller is just as stuck in limbo and cannot go into escrow with another buyer right?
Click to expand...

Close, but not quite accurate.

Correct.

-IR2
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So if Akim can wait it out, how long can the game of chicken go on for?  Is there any limit for how long an escrow can be left open?
Since they are in Escrow, does the seller have to keep the property exactly in the same condition/features as was stated on the MLS at time of escrow opening (cannot let property get run down, cannot re-landscape or upgrade fixtures, etc)?  Basically hold the seller hostage in their own home since they cannot do anything to their house like a renter?
 
I am very interested in everyone's opinion on the matter of the arbitration clause, as well as the liquidated damage clause. Has anyone done a deal without signing these? (Sorry if this is slightly off the topic). Thanks!

qwerty said:
...
Which raises another point, should buyers sign off on the arbitration clause in the purchase contract to begin with? I think most people blindly sign off on it without realizing what it really means.
...
Click to expand...
 
Thanks for all the replies, this helps a lot.  I sent a note saying I'm willing to take steps in the direction of legal action.    They are trying to play chicken.  I'm in no hurry to get the deposit back (although you can by ST bank preferred w/ qual div treatment below par @ 6%+!!!!) and can wait it out.    I stated I have lawyers at large firms who have examined the case and stated I will win.    I told them $1K for their time and that's it.  It was over the 17 day period, but I signed nothing else and made sure of it. 
 
akim997 said:
I went into an escrow on a house, and I recently dropped out of escrow since I couldn't get the loan to work out. 

My current house did not appraise well, such that I wouldn't be able to offset the current mortgage with rental income. 
Click to expand...

Akim, why didn't you sell your current place? Sorry if you already answered in a previous post. i know you talked about your options and choices but didn't recall the specific reason you didn't try to sell your current house.
 
Akim - so did you get your deposit back? Buy side agents need to add some language to purchase agreements regarding this deposit thing. Something along the lines that if a deposit is not released timely the seller will have to pay a fee/damages.  Sounds like this happens way to often. 
 
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