Seller wont release EMD and is threatening to sue me

[Shane Pico]

Hello all and thank you for any help!

I attempted to buy my first STR and it hasn't gone perfectly... But at least I've learned a lot so far! I am now at a place where it feels like I need a lawyer or at least some legal advice. Here's the run down:

Price: $550,000 - I signed an appraisal waiver - 1st appraisal: $425,000 - 2nd appraisal: $475,000 - my lender wrote a decline letter stating they wouldn't fund the loan (part of the loan required I had a certain amount of reserves in the bank and if a covered the difference I wouldn't have enough which is why they wouldn't fund)  - I sent over the decline letter and signed the cancelation of escrow and release of funds letter - a week later the seller offered to carry the loan with very poor terms - the seller is now trying to keep my emd ($16,500) - they are also threatening to sue me for incurred losses if I don't give it to them - they are claiming that because they offered to carry the loan, that I backed out of the purchase in bad faith and had no intent in purchasing. The simple truth is that the lender refused to fund the loan and I did not sign a loan contingency waiver. I even offered to give them $1,500 as a peace offering to get this wrapped up quicker. Yet here I am! lol

These are just the basics to the whole dilemma, I believe they have no legal right to any of my money, but before i go down this road I would love to have any bit of advice this community has to offer. I am still pretty new to this world so this can potentially be a huge set back for me if I don't handle it properly.

Thank you for everything BiggerPockets Fam!

[Russell Brazil]

Tell them if they dont release the EMD you will file a lis pendens so they won't be able to sell the house with the cloud on the title. It is an empty threat....but an empty threat that has proven to be very successful.