Monday, October 29, 2012
How Do I Get My Deposit Back?
This week I had a curious email with the following request for assistance:
Being from UK I am not sure how things work there, I attempted to purchase a property back in April, put a deposit down, after which I had an inspection done which found some things had been damaged in the property since I viewed it. I decided not to proceed.
The Agents (mine and the seller’s) both refuse to respond. I have found from title escrow company I needed to sign a cancellation form so I have done this, but it looks like the seller is refusing to sign it, so my deposit is being held.
How do such cases get resolved? As you can see we are now in October and still I am getting no response from agents and stone wall from the title/escrow company.
My Reply: Hi Martin, Thanks for your question. I will have to give you a fairly generic answer because I don't have all your particulars at hand. As I understand this, you placed a deposit on a property in April, and following the inspection decided not to go forward. If you were working with a Realtor who was representing you (as a buyer’s agent), this probably would not be an issue, but apparently you have an agent representing the seller--and the seller also has an agent representing him.
The situation here is pretty much two against one. (Two agents against you) So where do you go from here and what's the next step? My professional opinion is you need to find a young hungry lawyer. At this point you are in quicksand and need an ally.
I will assume that the property in question is a house, and that the inspection showed some damage or unseen wear that has cooled your desire to own this property. I will also assume that the seller was thrilled to get your offer, which may have been for more money than he was expecting to get--meaning that your withdrawal from the transaction leaves him with no buyer in that price range. (And no real willingness to relist the property and sell it to another party.)
Typically a case of this kind is settled with the seller coming to grips with the deficiency in his property and either offer to make the repair or returning your deposit and life goes on.
But because the seller is unwilling to return your deposit, probably he has given you a reason--I would suppose he is saying that there was a time period in which you could have withdrawn, but he didn't hear from you and that time frame has expired and so now YOU either have to perform (buy the house). OR he gets to keep your deposit as "liquidated damages". This would be a fairly common response from a seller faced with losing a sweet deal.
The seller himself is probably not holding your deposit (escrow) money, that's the job of the listing agent or the escrow company. I will tell you from personal experience that nobody wants this kind of deposit money in their accounts--especially if they suspect the house is never going to close. So here are two good things you probably didn't suspect, (1) whoever is holding the funds wants to rid themselves of your deposit. And (2). Interpleader is an informal real estate court, which if you ask to have the case sent there, will hear your case and rule on who gets to keep your funds. It's not free, so you need to think over that avenue of redress. At Interpleader, they may give you back all the deposit, they may split it between you and the seller, or they might give it all to him...it depends on their findings. You can invite your lawyer to come and help you.
If the deposit in question is less than $5,000, you can skip Interpleader and take the seller to small claims court. There you may have a real judge hear the case but more likely you will be asked to sit with a mediator who will hear both sides and suggest a fair way to settle, if you both agree the case will be closed, if you don't agree, get out your wallet because the next steps will be costly, and you will begin to learn the intricacies of the American Legal System.
Or you might change your mind, and decide to buy the house. You may offer a little less for the property than you first did due to the problems unearthed during the home inspection. I don't know the real facts or the personalities involved, but if that house was worthy of your offer 6 months ago, you might still want it for the "right" price.
Martin bear in mind that Florida does not allow Realtors to practice law, so my answers are only my answers, but I wish you success and hope you do consult a real lawyer.
Dane Hahn is a real estate professional practicing in New Hampshire and Charlotte and Sarasota Counties in Florida. You can reach him at firstname.lastname@example.org or by phone at 941-681-0312