Earnest money recovery

[Ben Nahir]

I recently backed out of a potential investment and am trying to recover my earnest money. Any advice would be greatly appreciated.

The details: 14 year old attached townhome with 2 (I believe) previous owners. Was on the market for 2 months before we offered. The original asking price was $249k, dropped to $234k after 3 weeks, and then again to $219k two days before we offered. We offered at $210 with $2k closing from sellers. A second offer came in just after ours but they gave us the option to meet their asking price, no closing, since we got our offer in first. We agreed to $219k with no closing. Put down $2k in earnest money. Had the house inspected and it came back generally favorable. We asked for the following from the sellers: roof inspection (due to moss buildup) and repair (if necessary), inspection and certification of the furnace and water heater, professional carpet cleaning (high traffic had muddied the carpets), and installation of necessary alarms/detectors (smoke, CO, etc).

We got our repair addendum to the sellers within 3 days of the inspection, so they had over 10 days to respond. When they had not responded with 5 days left, our agent asked theirs if extending the inspection period deadline would be necessary. Their agent said no. We then did not hear from them until the late afternoon of the last day for the inspection period (near the end of normal business hours). The sellers refused to pay for any inspections or repairs and only offered us a $1k credit to cover any and all costs we may incur with further work on the house. We flatly stated this was unacceptable and wouldn't proceed without a roof inspection, which at that point we were unable to do until the next morning (after the inspection period closed). The roof was inspected early the next morning and we found out by noon that day that the roof needs to be replaced. We informed the sellers and their agent of this and they offered a $1500 credit (less than half the cost of the roof repair) instead of $1k but refused any further payments. Since we had already told them we wouldn't purchase without full repair of the roof, we submitted an unconditional disapproval of their repair addendum.

As of today, the townhome is pending a new sale. However, we have not yet received a signed termination agreement from the sellers. Our agent contacted escrow to confirm that a clear title cannot be passed and a new transaction closed until our transaction is terminated. We are holding out hope that this will be sufficient to recover our earnest money but the sellers' agent seems intent on keeping the money. We have indicated we will take the issue through mediation if necessary but I'd prefer not to go that route if possible.

Thanks for any help and advice,

Ben