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  1. #1
    Join Date
    Sep 2018
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    Default Seller Won't Release Deposit (Earnest Money) After Cancellation of a Property Sale

    My question involves real estate located in the State of: Iowa

    Hello All, My question is in regards to a Release of Deposit (Earnest Money). Background: I made a cash offer on a property of bare land for 70K that was accepted by the seller on April 28,2018. I presented a earnest check for $1000 at this time. The purchase agreement stated that the closing to occur on or before June 1,2018. The closing was postponed 3 times due to the attorney not having all the documentation ready. On June 27th the lawyer that was preparing the title opinion called me and stated the legal description for the property was a mess and the only way to fix the issue was to have a survey done. The seller agreed to do a survey, although it may not occur for several weeks. Considering the time delay past the expected closing date and the expected further delay due to the survey I decided to withdraw and cancel the purchase. The seller has refused to sign the release of deposit to return my earnest money. He is upset that he will have to pay the abstract company for work that had already been done to update the abstract. He feels I should pay for this cost. I am not responsible for abstract cost according to the purchase agreement. My question is: Can the seller relist and sell this property without signing the release of deposit from a previous purchase agreement?

    Thanks in advance
    Jay

  2. #2
    Join Date
    Jan 2006
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    38,714

    Default Re: Release of Deposit (Earnest Money)

    Yes he can and unless you would be attempting to argue you still have an active purchase agreement that you wish to enforce, there isn’t anything you can do to prevent it.

    Unless the issue of the survey was listed in the purchase agreement, it was upon your request to have a survey performed. It appears the seller was willing to extend the date of closing to accomdate your requests.

    You are are the one that then rescinded your offer.

    Unless you can present something within the purchase agreement that would allow you to rescind your offer without penalty, he is acting within his rights to retain the earnest money.

  3. #3
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    Default Re: Release of Deposit (Earnest Money)

    Quote Quoting jk
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    Unless the issue of the survey was listed in the purchase agreement, it was upon your request to have a survey performed. It appears the seller was willing to extend the date of closing to accomdate your requests.
    I'm not sure I see that in the OP's post. OP refers to "the" lawyer, not "my" lawyer. If it was the seller's lawyer then it was the seller's need for the survey, not the buyer's.

    If that's the case, then OP was entitled to decline further delays and entitled to his earnest money back.

    OP should clarify that point.

  4. #4
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    Default Re: Release of Deposit (Earnest Money)

    Quote Quoting adjusterjack
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    I'm not sure I see that in the OP's post.
    I do. Seller was selling property. Buyer could have taken it as it stood. Apparently he wouldn’t. If he would have, all he had to do was say: no need for a survey. I’ll take it as is.

    If you want to take it a step further, buyer apparently agreed to allow the survey to take place and has since decided to not complete that agreement.

    Obviously we we don’t have the contracts involved in front of us but based on the situation as explained, the buyer is who terminated an otherwise active sale without any basis other than he suddenly decided he didn’t want complete the sale. Unless the contract allows for that, he is in breach and the seller almost certainly has a right to retain the earnest money.

    That is exectly why earnest money is deposited.

  5. #5
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    Default Re: Release of Deposit (Earnest Money)

    Still not seeing it that way and will defer further comment until OP clarifies.

  6. #6
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    Default Re: Release of Deposit (Earnest Money)

    Quote Quoting adjusterjack
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    I'm not sure I see that in the OP's post. OP refers to "the" lawyer, not "my" lawyer. If it was the seller's lawyer then it was the seller's need for the survey, not the buyer's.

    If that's the case, then OP was entitled to decline further delays and entitled to his earnest money back.

    OP should clarify that point.
    The lawyer is working for me as I am paying him to do the required title opinion. Basically he could not provide a deed without a survey being done first. He mentioned the legal description was a "mess" and the only way to fix this issue was a survey at the seller's expense. My feeling is that the seller was not prepared to sell the property as the purchase agreement stated that they would provide a clear title and abstract by June 1st. The delays are the reason for me canceling the sale. I appreciate everybody's responses

    Thank You

  7. #7
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    Default Re: Release of Deposit (Earnest Money)

    He absolutely could provide a deed without s survey. All he had to do is write down what he claimed to be selling you and frame the deed around that. Completely legal and legit.

    And while your attorney may have suggested a survey, I am pretty sure he didn’t say it had to be at the sellers expense. He may have suggested you proposed the seller pay for it but if the attorney actually said that, he lied.

    When i sold real estate, if the buyer wanted s survey, they generally paid for it. The seller has no obligation to provide s survey.

    now after what you’ve said I believe the seller has all rights to retain the earnest money. He agreed to perform as you requested and after that you bailed. Since there appears to be no breach and you had agreed, if only by acquiescence, of an extension of the closing, you pulled the plug without cause.

    If you believe otherwise and can’t convince the seller of the same, you can always sue the seller for the $1000. If you have a small claims court in your state it wouldn’t cost much. Otherwise you will likely need an attorney and that grand (of unrecoverable costs) wont go very far. You might break even on the deal. You may the attorney a grand and win the grand from the seller.

  8. #8
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    Default Re: Release of Deposit (Earnest Money)

    Quote Quoting jaybird828
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    The lawyer is working for me as I am paying him to do the required title opinion. Basically he could not provide a deed without a survey being done first. He mentioned the legal description was a "mess" and the only way to fix this issue was a survey at the seller's expense. My feeling is that the seller was not prepared to sell the property as the purchase agreement stated that they would provide a clear title and abstract by June 1st. The delays are the reason for me canceling the sale. I appreciate everybody's responses

    Thank You
    Given the additional details I'm changing my vote to agree with JK.

  9. #9
    Join Date
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    Default Re: Release of Deposit (Earnest Money)

    Me too. It sounds like everything that first delayed and then ended the deal was from the OP (buyers) side.

  10. #10
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    Default Re: Seller Won't Release Deposit (Earnest Money) After Cancellation of a Property Sal

    Quote Quoting jaybird828
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    The purchase agreement stated that the closing to occur on or before June 1,2018. The closing was postponed 3 times due to the attorney not having all the documentation ready.
    So far, you seem to be stating that the delays were due to slow action by your own lawyer. As such, it would appear that the seller was ready to close on the scheduled dates but that you were not.
    Quote Quoting jaybird828
    On June 27th the lawyer that was preparing the title opinion called me and stated the legal description for the property was a mess and the only way to fix the issue was to have a survey done. The seller agreed to do a survey, although it may not occur for several weeks. Considering the time delay past the expected closing date and the expected further delay due to the survey I decided to withdraw and cancel the purchase.
    At this point, as others have pointed out, it's not clear that the seller had any contractual obligation to perform a survey. If the survey was for your own peace of mind, and you did not want to pay to expedite the survey so that it could be completed in advance of the scheduled closing, then it's difficult to see how the seller would be responsible for your inability to close -- again it would appear that the seller was ready to close but you were not.
    Quote Quoting jaybird828
    View Post
    The lawyer is working for me as I am paying him to do the required title opinion. Basically he could not provide a deed without a survey being done first. He mentioned the legal description was a "mess" and the only way to fix this issue was a survey at the seller's expense.
    Unless the seller committed to provide a survey as part of the purchase contract, there is no reason why the seller would be obligated to pay for the survey. The seller would have to cooperate to the extent that the surveyors would be allowed to access the property.

    The issue here may be that your lawyer was concerned that the description was not accurate, and thus that a survey was needed to ensure that you were in fact acquiring the land that you and the seller believed to be changing hands in the transaction -- but you would have to ask your lawyer about that. If a survey were to reveal that the land you were actually purchasing was different from the land that was described in the purchase contract, due (for example) to boundary lines being in a different location than you and the seller believe them to be, then that might provide you with an out; but if the survey were to simply confirm the boundaries of the land, even if resulting in a better legal description, then you would get the benefit of your bargain with or without a survey.

    Your lawyer should be able to guide you through what your contract does and does not require of you and the seller, the contingencies in the contract, and whether you have a valid basis to cancel the purchase based upon the facts and applicable contingencies. We would need a lot more information.

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