Seller refusing to sign release during contingency period

OP

Rockville, MD · Member since 2015 · 13 posts · 3 votes

5y

Thank you Russell. My agent and I actually just spoke with a real estate attorney and I mentioned your advice on telling them about filing a lis pendens and he agreed. We will be doing that as our next step.

And yes, my agent just said that mediation/arbitration/court will be the way to get the EMD back. So, fingers crossed that the lis pendens scares them enough.

Thanks again!!

Justin Lanciault

Realtor · Washington, DC · Member since 2018 · 166 posts · 88 votes

5y

I had this happen to clients before. The story is too long to get into, but I recommended that they file a lis pendens, they did not listen, and to this day, there money is still just sitting, don't be like them and file the lis pendens.

Eric James

Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes

5y

Isn't the earnest money held by a third party?

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

5y

Originally posted by @Eric James:

Isn't the earnest money held by a third party?

Yes, but that third party (the title company) isn’t going to assume the liability of deciding who should get it, hence their requirement for either a release signed by both parties or a court order

2 Reply

OP

Rockville, MD · Member since 2015 · 13 posts · 3 votes

5y

Yep. We just sent the language over to them saying we'll be filing a lis pendens. We told them that we are giving them until Sunday 6/20 to return the signed contract release and if that doesn't happen we'll be filing the lis pendens on Monday 6/21. And we are certainly do that.

Eric James

Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes

5y

Originally posted by @Wayne Brooks:

Originally posted by @Eric James:

Isn't the earnest money held by a third party?

Yes, but that third party (the title company) isn’t going to assume the liability of deciding who should get it, hence their requirement for either a release signed by both parties or a court order

That's unfortunate

in TX the seller has to actually dispute the return of the earnest money. Otherwise it gets refunded.

2 Reply

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

5y

Originally posted by @Jacquice Davis:

Yep. We just sent the language over to them saying we'll be filing a lis pendens. We told them that we are giving them until Sunday 6/20 to return the signed contract release and if that doesn't happen we'll be filing the lis pendens on Monday 6/21. And we are certainly do that.

How much was the earnest money if you don’t mind sharing?

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

5y

@Jacquice Davis stop pay the earnest money deposit check and you will get your money back. Maybe give it a couple days, but seriously I wouldn't let this drag on.

OP

Rockville, MD · Member since 2015 · 13 posts · 3 votes

5y

Originally posted by @Joe S.:

Originally posted by @Jacquice Davis:

Yep. We just sent the language over to them saying we'll be filing a lis pendens. We told them that we are giving them until Sunday 6/20 to return the signed contract release and if that doesn't happen we'll be filing the lis pendens on Monday 6/21. And we are certainly do that.

How much was the earnest money if you don’t mind sharing?

Thankfully, 'only' $2,500.

OP

Rockville, MD · Member since 2015 · 13 posts · 3 votes

5y

Originally posted by @Joe Splitrock:

@Jacquice Davis stop pay the earnest money deposit check and you will get your money back. Maybe give it a couple days, but seriously I wouldn't let this drag on.

It was via wire transfer, not electronic check deposit. I'm pretty sure wire transfers are final, no?

Charlie MacPherson

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

5y

@Jacquice Davis Another ploy you might try is a complaint through MLS via your agent. I'm thinking that until your EMD is returned, the seller's agent may not have the right to put the property back on MLS. I'm not positive, but it's worth a shot.

Another remedy is small claims court. You can sue the seller directly for the return of the EMD. I've gone to small claims twice and won both. Once as a plaintiff, once as a defendant. Gather all of your documents and make your case. It's a lot easier than folks think.

While you're there, I would mention that the seller fraudulently misrepresented the property, because they knew that why the previous deal had blown up. Given that, you might be able to demand double or triple damages, depending on that state's laws. Courts don't look kindly on fraud.

You should also sue to recover any expenses such as survey costs.

Good luck!

Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

5y

In 2018/19, Maryland passed a new law regarding earnest money deposits (EMDs). As the buyer, you should have executed a specific agreement concerning that EMD. What does it say?

Despite what has been stated in this thread, there is no law requiring a release to be signed by both parties in order for the holder to release an EMD. While that is standard practice, it's not the law.

The new Maryland law mirrors laws concerning real estate brokers and EMDs that have been on the books for a long time. The holder of that EMD likely has reserved some discretion in the agreement as to the disposition of the EMD. For example, our EMD agreement provides that when both parties do not sign a release, we can evaluate the claims of each party to the deposit... and then give notice of our intention to release the deposit after X days, to whom, and why. This notice and the justification provided in it usually gets the parties to discuss further and resolve their dispute. If either party properly opposes our notice, we interplead the funds (after deducting our fees and expenses for doing so).

In order to file a lis pendens you must first file a lawsuit regarding the matter. Depending on the amount of the EMD, taking that action may or may not be justifiable.

Gimer Law516 Reviews

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OP

Rockville, MD · Member since 2015 · 13 posts · 3 votes

5y

Originally posted by @Tom Gimer:

In 2018/19, Maryland passed a new law regarding earnest money deposits (EMDs). As the buyer, you should have executed a specific agreement concerning that EMD. What does it say?

Despite what has been stated in this thread, there is no law requiring a release to be signed by both parties in order for the holder to release an EMD. While that is standard practice, it's not the law.

The new Maryland law mirrors laws concerning real estate brokers and EMDs that have been on the books for a long time. The holder of that EMD likely has reserved some discretion in the agreement as to the disposition of the EMD. For example, our EMD agreement provides that when both parties do not sign a release, we can evaluate the claims of each party to the deposit... and then give notice of our intention to release the deposit after X days, to whom, and why. This notice and the justification provided in it usually gets the parties to discuss further and resolve their dispute. If either party properly opposes our notice, we interplead the funds (after deducting our fees and expenses for doing so).

In order to file a lis pendens you must first file a lawsuit regarding the matter. Depending on the amount of the EMD, taking that action may or may not be justifiable.

We spoke with a MD real estate attorney today (free consultation thing) and he mentioned the interpleader. Specifically, he said that since the funds are being held with the our (buyer's) escrow company (which is a MD company), our agent has to file an interpleader with the court. I asked him to clarify that he meant our agent, and not the escrow/title company, and he said yes: our agent has to file it. Does this make sense to you? Hopefully our escrow company has this same EMD agreement with this type of discretion. The lawyer also said that filing an interpleader automatically puts a lien (lis pendens) on the property. Sound right?

The amount in escrow is $2,500 (for your reference).

We told our agent this, and she is going to contact the escrow company, as well as her broker.

A few more things that have happened since my last post, for those interested (this part is just a vent): We started the process of filing a complaint to the MREC. We haven't submitted our supporting documents yet nor signed the final document to make it 'official'. However, even with our hitting the 'submit' button, it's gone to the MREC. A day after we did this, the seller called our agent's broker to complain about this. The broker called our agent asking for details and she relayed them. The seller then called our agent directly and started yelling at her. Saying that she (our agent) told us to sue her; she's (seller) going to sue us, blah blah, just being crazy and combative.

Now, the seller is saying she never knew the money was deposited into the escrow account once the contract was ratified -_- Our agent sends her the email with proof of the escrow company receiving the funds (which was also sent to the seller's agent...so she should have had it). The MREC calls our agent; our agent explains and forwards them (MREC) that email as well.

I don't believe that she never knew the funds were in escrow. Why would our agent send a 'release from escrow' document (along with the 'release from contract' document) if there was no money to be released.

We just want our $2,500 back -____-

OP

Rockville, MD · Member since 2015 · 13 posts · 3 votes

5y

Originally posted by @Tom Gimer:

In 2018/19, Maryland passed a new law regarding earnest money deposits (EMDs). As the buyer, you should have executed a specific agreement concerning that EMD. What does it say?

Despite what has been stated in this thread, there is no law requiring a release to be signed by both parties in order for the holder to release an EMD. While that is standard practice, it's not the law.

The new Maryland law mirrors laws concerning real estate brokers and EMDs that have been on the books for a long time. The holder of that EMD likely has reserved some discretion in the agreement as to the disposition of the EMD. For example, our EMD agreement provides that when both parties do not sign a release, we can evaluate the claims of each party to the deposit... and then give notice of our intention to release the deposit after X days, to whom, and why. This notice and the justification provided in it usually gets the parties to discuss further and resolve their dispute. If either party properly opposes our notice, we interplead the funds (after deducting our fees and expenses for doing so).

In order to file a lis pendens you must first file a lawsuit regarding the matter. Depending on the amount of the EMD, taking that action may or may not be justifiable.

Regarding:
In 2018/19, Maryland passed a new law regarding earnest money deposits (EMDs). As the buyer, you should have executed a specific agreement concerning that EMD. What does it say?

A specific agreement with the escrow company you mean?