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Updated almost 5 years ago,

User Stats

72
Posts
39
Votes
Steve LeBlanc
  • Rental Property Investor
  • Phoenix, AZ
39
Votes |
72
Posts

What happens when earnest money refund taking "too long"?

Steve LeBlanc
  • Rental Property Investor
  • Phoenix, AZ
Posted

Okay you keyboard lawyer warriors...just looking for some thoughts on the following scenario regarding delayed refund of earnest money.

Original contract language about earnest money is as follows (this is in Illinois): "The assignment fee is refundable should assignee decide not to move forward during due diligence. Due diligence will be completed on or before 1/30/20 and closing on the property is to be completed on or before 3/9/20. Should the Assignee decide to cancel this assignment agreement after the due diligence period $3000 of the Assignment Fee will not be refundable and be due to the Assignor.

Upon doing due diligence and getting an inspection, assignee decided to cancel the contract on 1/29/20...prior to due diligence period expiring.

Now, it's approximately 10 days after cancelation, and the seller's agent is having "problems" getting a hold of the seller to sign the cancelation agreement form that is apparently required to authorize the title company to refund the earnest/assignment money.  

According to PART 1450 REAL ESTATE LICENSE ACT OF 2000, SECTION 1450.750 SPECIAL ACCOUNTS:  Disbursement of Escrow Moneys. Once the payor's depository has honored the deposit of escrow funds, the sponsoring broker shall disburse escrow moneys according to the following requirements, as set forth in Section 20-20(a)(17) of the Act:

The sponsoring broker must disburse escrow moneys upon consummation or termination of the transaction. The actual terms of the contract regarding the release of the escrow moneys shall be adhered to by the sponsoring broker holding these escrow moneys. The disbursement must be according to the terms of the contract and must be:

A) made not later than the next business day following the sponsoring broker's receipt of notice of the consummation or termination of the transaction or

B) otherwise disbursed in accordance with the written direction of all principals to the transaction or their duly authorized agents.

So the question is, what is a reasonable and allowable time to disperse escrow money back to the buyer upon termination of the contract? 

And, is a signed letter by the seller a "requirement" to meet the intent of the law?  

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