Earnest money not being returned

[Abdul R.]

Hello All,

The quick story....

I entered into a contract to purchase a quadplex in Noblesville, Indiana but the seller never did their part to provide the items I requested in the purchase agreement such as repairs item lists, initial walk-thru's  and rental payment history within the first 2 weeks as stated in the purchase contract. I in turn took a great deal amount of time (in good faith), trying to find multiple contractors to try to make the deal work, . Ultimately, the numbers did not work and I had to back out; but now the seller refuses to return the earnest money, stating " When we were presented with the release we were well outside the inspection period and we feel it is only fair for us to retain the earnest money as damages."

Spoke to my realtor, he states the EM is with the brokerage company.  My realtor said maybe we make a deal to get half of the EM ($500.00 out of the 1k) back but I don't want that. I don't see why I need to do that, as it is MY MONEY.  What options do I have?

[Jackie McBride]

Hi Abdul R.. I'm a broker in Fort Wayne Indiana.  The earnest money will stay in escrow until there is a signed agreement to release it.  Your agent may have used the standard Indiana purchase agreement which defines on page 1 the process that will happen to disburse funds.  

From the purchase agreement:  Disbursement: Upon notification that Buyer or Seller intends not to perform, and if Escrow Agent is the Broker, then Broker holding the Earnest Money may release the Earnest Money as provided in this Agreement. If no provision is made in this Agreement, Broker may send to Buyer and Seller notice of the disbursement by certified mail of the intended payee of the Earnest Money as permitted in 876 IAC 8-2-2. If neither Buyer nor Seller enters into a mutual release or initiates litigation within sixty (60) days of the mailing date of the certified letter, Broker may release the Earnest Money to the party identified in the certified letter. If the Escrow Agent is the Broker, Broker shall be absolved from any responsibility to make payment to Seller or Buyer unless the parties enter into a Mutual Release or a Court issues an Order for payment, except as permitted in 876 IAC 8-2-2 (release of earnest money). Buyer and Seller agree to hold the Broker harmless from any liability, including attorney's fees and costs, for good faith disbursement of Earnest Money in accordance with this Agreement and licensing regulations.

No matter which purchase agreement was used state law mandates the process for release of earnest money.

I hope this answers your questions.  

Good luck.

Jackie McBride

Perfect Pad Realty, LLC