Seller won't return deposit after financing failed - Home buying question

So, the seller's agent lied and said that the condo upstairs from the one I was buying (2 unit house) was in good standing and owner occupied. Financing failed because the bank obviously wouldn't give a loan on a 2 unit property with the other unit in foreclosure (nothing was public until the day before the P&S agreement). Now the seller is saying they don't have to return my deposit because they are out legal fees. Guessing I need to send a certified letter with the loan denial letter demanding a return of my funds and a copy of the P&S agreement. Any chance they are guilty of bad faith or any other improprieties that would give me automatic damages? This is in Massachusetts.

1. What does the P&S say about the deposit?

2. If it is non-refundable, you may have an argument that the misrepresentation (intentional or otherwise) by their agent and on which you relied negates the provision.

3. I am confused; condos are usually separate properties within a single building/development. Why would the foreclosure of one affect the sale of the other? I could see if you were trying to get a loan on a condo in a big development that had lots of foreclosures, as the lender might be afraid that the developer wont be able to provide amenities, keep place up etc. On a two unit tha makes less sense.

Sue the realtor, go heavy, deposit plus damages. Realtor will make it happen.

It's gonna depend on the language of the P&S agreement. A certified letter demanding repayment is as good a place to start as any. But I'm confused, does the seller have your money? Or does someone else, like an escrow/title/closing company have your money? When I've paid deposits in the past I've paid them to an escrow holder. In that case, you need to demand your money back from the escrow company.

Burn down the house. With the dirt pimps in it. Win Win.

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Originally Posted by Huck_Schmuck

Sue the realtor, go heavy, deposit plus damages. Realtor will make it happen.

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This. Everything else is going to be a shitload more work/confusion/expense for you.

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Originally Posted by AdironRider

This. Everything else is going to be a shitload more work/confusion/expense for you.

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Your advice is universally retarded.

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If there is a seller's agent, I assume you have a buyer's agent? Who did you make the check out to? Surely not the seller. In these parts, it would be the obligation of the seller's agent to return the deposit if your contract so requires and the sale failed for a covered contingency.

How much is the deposit?

I'm pretty sure the check would have to be made out to the agency that's representing the seller. It's then held in an escrow account. Usually its written in the purchase agreement that if the buyer can't get financing he/she gets their money back.

Luckily for me, we never got to a agreed upon P&S. On the day, actually the hour, I was going to sign it, I found out the unit was in foreclosure when we demanded a copy of the master insurance policy. So luckily I'm not out my down payment, just my deposit. The language says that if I am unable to obtain financing, all deposits and the down payment must be returned. I sent the financing denial letter, they want a denial letter from another bank, and said that my denial letter isn't a "formal" denial letter.

Yes, I made the check out to the seller's agent, but the terms are that his client must give permission for him to release the funds back to me.

It's a very big deal for a lender when you have a 2 unit condo and both units are in foreclosure, according to my MB and attorney. #1, there basically is no condo association at that point. #2 The master insurance is held by the bank. #3, as there is no functioning condo association, it is not within the rules for me to take any action to repair or replace any part of the master property, and even if I did, I would have to pay for it all myself, as the other bank that owns the other unit is not going to shell out anything. #4, all routine expenses would fall squarely on my shoulder as the owed fees are trumped by the mortgage holder.

They (the seller's agent) is having a couple of open houses soon, I'm thinking of dropping by.

How did you make a deposit without a P&S agreement? I don't get it. Shit must work differently out there.

Do you have a buyer's agent? Surely he/she is your best advocate right now.

What, exactly, did you sign? What does it say in terms of a financing contingency?

I'm confused too. Usually there is an earnest money (deposit) agreement that's part of the written offer to seller. That agreement should specify terms of return. what does it say? If your RE agent let you give somebody money without a signed agreement of some sort, he or she should be kicked in the nuts or vag.

Has sellers agent cashed the check yet? If not, just put a stop payment on it.

An Offer to Purchase is typically signed prior to the full P&S in MA. The Offer to Purchase is a binding, standardized form with offer price, general financing information, and declared contingencies, if any. A deposit is given on submitting the Offer to Purchase.

If you've exhaust trying to reason with the seller and seller's agent, start with the certified letter. Sounds like these fools' own agent botched the deal with the misrepresentation.

If your contract was contingent on you getting financing and you didn't waive that contingency, then you will get your money back.
Get a formal decline letter on company stationary from the lender that said no fuckin way, email a copy to the agents and the escrow and tell them all you expect a complete refund.
That is it. Done and done.

Buddy of mine took a $40k deposit on a house in Menlo Park. Buyer failed to comply with contract and he kept the money. I assume every contract is different.

^^Mine clearly says if I don't get financing they return the cash. They are just looking at the email copy of the letter and saying nope, that's not sufficient.

Money paid to sellers rep in escrow. Escrow is not supposed to give up the $ without permission of both parties.

The road to your money goes through the listing agent. What does your agent say?

I bought an REO, but i thought that earnest check went into an escrow account or with the title company? With that said, if it wasnt listed as a contingency you may be assed out. Thats on your realtor for having you sign an agreemant without that in place. But if yours clearly states that as one, i think the seller is out of luck on their legal fee's. Thats what the contingencies are there for. The first place i tried to buy i had contingencies in place for appraisal, inspection and financing. The house didnt appraise, i was promptly returned my earnest money. seems a little fishy to me. As stated, put this on your realtor to get your fucking money back. Thats his/her job. I didnt have to deal with any of that shit. Thats why you have a realtor. Otherwise, what the hell they there for. If they fucked up, they owe you and need to pony up. Otherwise, sue em.

I want my avatar back buddy

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Originally Posted by RootSkier

The road to your money goes through the listing agent. What does your agent say?

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That this is ridiculous and hes never seen anything like it. We are sending a certified letter. After that I'll have to file I guess.

I'd be surprised if the seller isn't liable for damages over and above the deposit if they persist in dicking you around.

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Originally Posted by neufox47

That this is ridiculous and hes never seen anything like it. We are sending a certified letter. After that I'll have to file I guess.

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make sure it is strongly worded...

In your letter, advise him if he doesn't return the deposit, you will filed appropriate legal action and report him to the board of relators.

You are subject to the rules in MA - talk to the MA real estate board and/or an attorney. http://www.mass.gov/ocabr/licensee/dpl-boards/re/


In larger investment deals, ie larger earnest money involved, the contract usually specifically calls for return of the earnest money by the broker/closing entity upon written notice by buyer as long as in line with the dates/mechanisms of the contract.

In Colorado a dispute typically is allowed by the real estate commission rules to be handled in one of several ways unless more specifically detailed in the contract:

"Unless otherwise indicated in the Commission-approved contract to buy and sell, a broker is not required
to take any action regarding the release of the earnest money deposit when there is a controversy. If the
following provisions are included in the contract, the broker may exercise three options in the event of an
earnest money dispute, if the broker is the holder of the earnest money deposit. One option is that the broker
may await any proceeding between the parties. Another option for the broker is to interplead all parties and
deposit the earnest money into a court of competent jurisdiction. If included in the contract to buy and sell,
the broker is entitled to recover court costs and reasonable attorney and legal fees. However, if this provision
is struck from the contract to buy and sell, the broker may not be entitled to recovery those costs. A third
option available to the broker is to provide notice to the buyer and seller that unless the broker receives a copy
of the Summons and Complaint or Claim (between the buyer and seller) containing a case number of the
lawsuit within one hundred twenty (120) days of the broker’s notice to the parties, the broker will be
authorized to return the earnest money to the buyer."

Edit to add: Unless the Seller's broker is somehow obstructing the process of returning the earnest money or performing malpractice rather than just relaying the sellers desires your legal fight is with the seller rather than the broker. Ie suing the broker is not a course of action you'd be likely to pursue.

Also remind them of your high level connections to the British Dental Association.

I was going to chime in here, but I do happen to know that the way real estate transactions go down in MA is very different than most other states. So only take advice from people who are specifically familiar with that.