Dear Monty: We are trying to buy a house, but the seller has withdrawn from the sale. The real estate agent keeps our deposit until the seller pays their commission. I know this is not legal, but how can I get my big deposit back?
Monty: The seller signed two contracts in this deal: the listing contract with the broker and the purchase contract with you. The answer to your question will likely be in the purchase contract between you and the homeowner.
Every country has different rules
Not knowing the location of the property makes it an unanswerable question for me. Each country has its own legal theories and legislation. Wisconsin law is the basis for the comments below. Check your contract for similar language about serious money, and you may find your answer.
The Wisconsin home purchase contract states that “the company’s spending of the earnest money does not determine the legal rights of the parties with respect to this offer. The legal right of buyers or sellers to make money cannot be determined by the company holding the earnest money. At least 30 days prior to payment Per (1), (4) or (5) above, when Company becomes aware that neither party agrees to the payments, Company shall provide written notice to Buyer and Seller of intent to exchange by certified mail.
“If the buyer or seller does not agree to the proposed payments from the company, a lawsuit may be filed to obtain a court order regarding the exchange. The small claims court has jurisdiction over all serious financial disputes arising from the sale of residential real estate with one to four housing units.”
“Buyer and Seller should consider consulting attorneys regarding their statutory rights under this Offer in the event of a dispute. The parties agree to release Company from any liability for good faith earnest money payments pursuant to this Offering or applicable Safety Management and Professional Services regulations in respect of Earned Money “.
“(1) as directed by the attorney who reviewed the transaction and does not represent the buyer or seller; (iv) upon permission granted within this offer; (v) any other payments required or permitted by law.”
» Ask your broker to draft a reciprocal cancellation and release document stating that the seller will return the serious money within 10 days.
» Ask the listing broker to draft a reciprocal cancellation and release document stating that the seller will return the serious money within 10 days.
“There may be other options. Contact your attorney or find a real estate attorney and get their opinion on the best course of action.
opinion on history
Circumstances are unclear as to the reason behind the seller’s retreat. There are various reasons one or both of the real estate agents may have inadvertently contributed to this event.
My experience is that state legislators nationwide have abdicated their legislative responsibilities to the real estate industry. The effects of the inconsistency caused lawmakers to create a real estate committee composed of real estate brokers.
As a result, pre-approved real estate forms in many states have become agent-friendly over many decades. They now protect real estate brokers and agents from litigation and protect their commission.
Real estate is not alone. There are many countries where there are supervisory boards in other regulated industries. I liken this practice to saying the fox guarding the hen house.
Richard Montgomery is the author of the book home money: Insider Secrets to Saving Thousands When Buying or Selling a Home. He advocates for industry reform and provides readers with unbiased real estate advice. Click here to ask him a question in DearMonty.comor follow him on Twitter at Tweet embed. Click here for previous columns. The opinions expressed are his own.