If I have a contract between me and the buyer (with the intention of assigning the contract to someone else), I am of the understanding that I would submit my contract to the title/escrow company along with earnest money. If I’m unable to find a buyer of the contract to assign it to, I want to use an exit clause to cancel the deal. Will the title/escrow company charge me any fees if the deal does not go through?
It all depends on the laws of the state you operate in, local customs, and what’s written in your contract, especially the wording of the weasel clauses.
Here in NY, its customary for real estate buyers and sellers to engage in attorneys, and normally the seller’s attorney holds the earnest money deposit in escrow, to be applied at closing. No title companies are used at this stage. And yes, you’ll incur some attorney fees whether the deal closes or not. The earnest money deposit is another matter.
I only had one instance as seller where I had to hold on to the buyer’s deposit, because I believed he engaged in some chicanery. He got a mortgage, then told the mortgage company that he was laid off, the mortgage company then pulled the commitment. He cited this mortgage contingency clause in the contract to demand a refund.
That sounded fishy to me as he told me he was employed in a family business, not to worry, and was conveniently laid off one week before closing. So I rejected his argument and kept his deposit, an amount of over $12,000. My position is: "he technically got a mortgage commitment but the contingency cause did not address the issue of the bank cancelling the commitment.
To make a long story short, his attorney tried bullying me, after the first rude threatening phone call, I hung up on him the next four calls, especially when he started yelling and screaming. Finally on the sixth call, asked me not to hang up, promised me he’ll behave and nicely begged for half his money back. Said the man’s wife was crying day and night to gain my sympathy. I said to him “this sounds better, why didn’t you tell me this before”?
My attorney then sent the buyer and myself a certified letter telling us to settle this in 30 days, or he’ll send the escrow to be held by the court.
The only recourse for the buyer is to sue me, and it’ll take 18 months at least to get a court date. My attorney who’s holding the funds advised he’ll turn it over to be held by the courts, as he wants to have nothing to do with the aftermath. Told me the seller and I would have to go to court to have the funds released.
The buyer’s attorney told me the same thing, thinking that not getting hold of the $12,000 immediately would scare me. It didn’t. I told them both I have no need for the $12,000. If it’s held for the next two years, its no skin off my nose.
I finally told the buyer’s attorney after agreeing to a partial refund “I don’t know what games your client wanted to play, but I believe losing $6,000.00 ought to teach him a lesson not to waste my time, or any one else’s”.
I goes to show that when you have money and credit to play with, you’re way ahead of the game, and have the last laugh…