Attorney won't return deposit

[Hami Hot]

Attorney won't return deposit!

Hello everyone,

Buying: I have been reading for long time, and finally made my move last month. I placed several bids on a townhouse, and finally got it for 123k. 6k needs to be paid in taxes, and another 4-5 in fixing up. It is a fairly new townhouse built in 2006, and similar townhouses sell for 165k.

Title Problem: I looked up here on BiggerPockets and hired an attorney recommended by you guys in my local area. I hired him and after his research to make sure the title is clear for closing. He informed me that the property is owned by Fannie Mae, and it is not clear if FM was served properly from the foreclosure file…, and their title company will not insure the property. The other attorney for the townhouse will not work with us, and says that we either close or he will relist the house at the court. If the houses sells below 123k then he will take it out of my deposit, which is 6200

Question: (Past experience, recommendation) has another member gone through similar experience? What should I do or what is the proper next step? My attorney will attempt to talk to the other attorney again, and he will also try the US attorney. If that did not work, then I can take him to court, but that will be very expensive, which I cannot afford.

Thank you,
HH

[J Scott]

Just to be clear:

1. You have a contract on a property that you believe is a retail sale (not bank owned)
2. Your title search indicated that the property is foreclosed (bank owned)
3. The seller's attorney is telling you that you must close or potentially lose part of your deposit

Is that correct? Or am I missing/misinterpreting something?

If that's correct, it sounds like you can't get clear title on the property because the seller doesn't currently hold title. Even if that's not correct, it still sounds like the seller can't provide clear title.

Assuming you're using a state contract or a contract that stipulates that the seller must convey clear title, you are not required to close without title being clear, and the seller's representative will need to return your deposit.

Does your contract stipulate conveyance of clear title by seller?