Escrow and contingencies expired but not signed for removal

[Will Lee]

Thank u for any info before hand: Context: Family friend in escrow to purchase 4 plex in northern Cali . Loan was originally verbally communicated to go thru then had issues appraising. Investment appraisal came in 10k under but market comp appraised at value. Loan took 2 months to finally "verbally" approve but now Escrow and contingency all expired but not actively signed to remove. All docs are 1 month expired. Notice to perform threatening cancellation and going to arbitration (directly insisting that buyer would lose deposit) was only made 1 month after escrow expired (2 days ago) We feel these are empty threats but getting stressed since agent is dual agent and not acting in best interest of buyer in his communication and not providing solutions besides asking for buyer to sign removal of contingencies and release deposit to seller for 2 more weeks but Bank said they need 3 more weeks to close. Assuming this is standard California association realtor form. Buyer doesn't want to risk deposit in situation since bank is flaky and wants to sign loan papers before releasing deposit and contingencies (even tho already expired) Seller threatening to cancel and take to mediation Unless release of deposit is signed (scare tactic for leverage?) Buyer is sill interested in property but can't do anything to speed up loan as its in banks hands and has communicated appropriately: Agent is not helping with advice beside signing release. Seems like conflict of interest. Never proposed to ask for ext of escrow or contingencies to seller in addendum ( as I think he should have) The question: Should buyer be concerned about deposit if seller follows thru with cancellation and mediation? Buyer would like to proceed but just needs more time (limited to bank). Otherwise would like to cancel with deposit back. Seller not accepting above request unless deposit released. Please help as this has become stressful for father in law who pulled out of 401k to buy property and consistently getting threats of losing deposit since its buyers not performing and therefore is liquidated damages is buyers responsibility to pay. Thanks you!

[Chris Mason]

Hi @Will Lee,

I am not a lawyer, talk to a lawyer, this is not legal advice. 

The most common interpretation of the CAR RPA is that the buyer's EMD is protected by the relevant contingencies until said contingencies are lifted by them signing specific paperwork to that effect. I've never been involved in litigation, but agents (including those with law degrees) tend to act in a way that is consistent with them believing this interpretation is the correct interpretation.

Of course it is a conflict of interest. Of course it is a scare tactic. As a smart fellow once said, no one can serve two masters and make both happy. The listing agent works for the seller, I don't care what the dual agency disclosure paperwork says. Until a REI has a half dozen or so deals under her or his belt, she or he should use her or his own agent.

Also, trying to close a 4plex investment property with any big bank? Like throwing spaghetti at the wall. Some of it will stick, sure, but a lot will fall off without good reason.