Posted by L.A. on October 10, 1998 at 11:18:37:
Thanks Rob (FL) !!!
How Do U Get (FULL) Escrow Deposit Refund ??? - Posted by L.A.
Posted by L.A. on October 09, 1998 at 06:36:29:
Recently, a friend of mind wanted to purchase her (first) home…a three bedroom condo.
She went to a major RETAIL firm, got an agent & the agent found her the condo in the M.L.S. systmem.
She put up an $1,500 earnest money ESCROW DEPOSIT, plus paid $350 (application fee) !!!
I found alot of this stuff out…after the fact !!!
The contract was “contingent” upon her getting F.H.A. financing.
SHE DIDN’T GET APPROVED.
When she tried to get a refund of (her) escrow deposit back, the LISTING crook…(oops)…I mean broker said NO WAY.
He only wants to give her half ($750) of her money back.
Since she did everything that she is supposed to do, I think she is entitled to a full refund.
Any sugguestions on what should be her next step?
By the way…& this is for U newbie’s…NEVER pay a (application fee) of $350 dollars.
On this deal…the buyers real estate agent was also the (LOAN OFFICER).
This first time homebuyer who went to a major RETAIL firm…(body shop)…was taken to the cleaners.
I don’t think she has a chance to get her app. fee back, but the escrow money I do.
Thanks in advance for any solutions !!!
Re: How Do U Get (FULL) Escrow Deposit Refund ??? - Posted by JPiper
Posted by JPiper on October 09, 1998 at 20:55:25:
First, as stated below, most contracts are contingent upon financing, and most contracts allow for the return of earnest money if this contingency cannot be met. Since this contract was originated by a real estate firm the chances are it’s a standard contract, and therefore allows for the return of the earnest money. This presupposes that your friend made an earnest effort to obtain financing and was turned down?..as opposed to not earnestly seeking it, or hindering the process in some manner in which case there may be cause to hold the earnest money.
Your friend should not sign any releases of any type. Threatening the broker, or filing a formal complaint, is a good idea. One final idea is to file a lis pendens against the property. If this is done, the property cannot be sold since no one will write title insurance on it. Check with an attorney on this.
Just make sure you read the contract, and make sure your friend complied with the provisions of it.
By the way, the application fee was probably for the appraisal and a credit report. I would not pay for an appraisal until I knew that I was preapproved subject to the appraisal.
Two issues to look at - Posted by John Behle
Posted by John Behle on October 09, 1998 at 11:52:55:
In addition to checking into the contract, you can check with the real estate division. Do this annonymously first just to find out the policy. A threat of reporting the agent to the division may be your “big stick” in this situation.
The two things to check out with the division - or with an attorney are what the policies are regarding the earnest money and conflicts of interest between agents and mortgage lending.
Each state differs, but most have very clear policies and procedures regarding earnest money. For example, in Utah if there is a dispute an “interpleader action” would be needed to resolve it. It isn’t the arbitrary decision of the agent, broker, title company or anyone else. In the last few years, they have tightened up the contracts to remove brokers from the middle. There are now very clear provisions and conditions in the contracts giving circumstances when the broker can return the money to the buyer or to the seller. There are very few circumstances where the agent, broker or anyone other than buyer or seller can keep any part of the money.
The other issue is the conflict of interest. In many states an agent can not act as both agent and loan officer or receive any type of referral fee. Check this out.
One of the greatest fears of any legitimate real estate agent is any threat against their license. They usually roll over in minutes if you have a legitimate claim. Only use it as a threat at first. Don’t report the agent unless they absolutely refuse to co-operate.
Again, read the contract carefully and retain an attorney if it heats up. Many times a “nasty gram” from an attorney will solve it in seconds.
Re: How Do U Get (FULL) Escrow Deposit Refund ??? - Posted by Bronchick
Posted by Bronchick on October 09, 1998 at 09:59:52:
Whether you can collect the entire amount back depends on what the contract states. It it states that the seller gets to keep 1/2 the earnest money whether the buyer closes or not FOR ANY REASON, then your friend is out of luck. If it reads like a “standard” board of realtors agreement, then the buyer usually gets ALL of her earnest money back if she can’t obtain loan approval.
Lawsuit needed for Lis Pendens? - Posted by John Behle
Posted by John Behle on October 09, 1998 at 22:33:42:
Sent a client down a few weeks ago to file a lis pendens on a property. They told her that she couldn’t unless there had already been a lawsuit filed. Said it was a new policy.
Anybody heard anything on that? Is it just Utah - or your state too?
Re: How Do U Get (FULL) Escrow Deposit Refund ??? - Posted by L.A.
Posted by L.A. on October 09, 1998 at 22:17:07:
Re: Two issues to look at - Posted by L.A.
Posted by L.A. on October 09, 1998 at 16:31:43:
Thanks Mr. Bronchick & Mr. Behle…Ii think I can help her out.
Re: Lawsuit needed for Lis Pendens? - Posted by Bud Branstetter
Posted by Bud Branstetter on October 12, 1998 at 12:29:32:
In Texas you have the lawsuit filed then the Lis Pendens.
Re: Lawsuit needed for Lis Pendens? - Posted by JPiper
Posted by JPiper on October 10, 1998 at 02:12:58:
In my state a lawsuit must be filed too. A “barebones” lawsuit can be filed quite easily though…and serves the purpose. I would use the threat of the lis pendens before I took the actual steps. I’ve only used this tactic a couple of times, and the threat alone was sufficient.
Re: Lawsuit needed for Lis Pendens? - Posted by Rob FL
Posted by Rob FL on October 10, 1998 at 08:52:27:
Lis Pendens is latin for “litigation pending.” So you have to file a complaint and a lawsuit before recording a lis pendens.