Fighting to get your deposit back... Help?

[PinkMartini]

I need some advice if anyone's been through this or knows anything about it.

We canceled escrow on the house we were purchasing due to not being able to come to terms on repair negotiations. We've been back & forth now for 2 weeks with the sellers trying to get them to give us back our $3000 deposit (after inspections are paid for comes out to $2400). Our realtor is speaking with their realtor Wednesday (their realtor is on vacation until Wed) to see if there's any way for them to relinquish it without going to small claims court...

One of the continegecies (sp?) in our contract was that we could come to an agreement on repair negotiations or we didn't have to buy the house and would get our deposit back, and our realtor said they are not legally able to keep our deposit, that we withdrew from the contract with a reasonable reason, and that we just have to wait for them to finally figure that out.

I guess if their realtor doesn't have a solution on Wed our next step is small claims court. DH nor I have never done anything like this and are clueless as to what we need to do next.... Our realtor is sending us a packet in the mail that he picked up for us from the court regarding the small claims court process...

Do we need a lawyer for this? Is there anything we could do to skip court? (We already wrote them a nice letter (when we first canceled the sale) letting them know why we were withdrawing and that we hoped they sell their house fast) How difficult is this? Is it a waste of time for $2400?

They live in Oregon and my understanding is that court is held where it's first filed, so they'd have to come down to Ca for court, I would think that fact alone would make them relinquish our deposit, but so far these people have been complete greedy bastards, so who knows...

(And yes I realize it's not legal to give legal advice online - that's not really what I'm looking for)

[thelittlebabu]

IANAL...

My understanding of small claims court is that no lawyers are involved. In this case, I think the contract will speak for itself. If indeed these contingencies were written into the contract, then I'm sure the judge will side with you.

ETA: Doesn't your realtor have a legal obligation to fight on your behalf?

[LRL]

Pinkmartini- You are in California, right? It is in the sellers best interest to refund your deposit because they cannot put their house back on the market if you take them to small claims court, and that could take awhile. They probably are not aware of this. Chances are they will be quick to refund it when they find that out once their realtor gets back into town.

It is a risk you take, and they don't technically have to give it back, but I think that most would rather sell their home than be involved in some sort of litigation.

[PinkMartini]

Pinkmartini- You are in California, right? It is in the sellers best interest to refund your deposit because they cannot put their house back on the market if you take them to small claims court, and that could take awhile. They probably are not aware of this. Chances are they will be quick to refund it when they find that out once their realtor gets back into town.

Yup, we're in CA. See, that's the thing... Their realtor (who is also based in CA) hasn't been on vacation for more than a few days and we've been fighting to get our deposit back for 2 weeks now. I would think their realtor would've told them this already... :confused:

[villanelle75]

I would take advantage of the fact that he is gone and call the brokerage. Explain the situation and tell them that you know Brokerdude is out of town but you are very concerned and wonder if you can speak to the office's manager/head broker, whatever.

[Rose]

You may just have to go to court if they refuse to give it to you. Rightfully it's yours based on the contingency in the contract but if they aren't giving it to you, you can't force them to write a check YKWIM? What explanation is their Realtor giving? Can the escrow company just release it to you?

[mamax2]

Isn't this fight really with the Broker? Doesn't the Broker hold escrow, not the actual seller? At least, that's my experience in every state I've done a RE transaction in. Maybe CA is different though...

I agree though, if your contract plainly stated a contingency for AGREEING to repairs (and not just a contingency for inspection) then it seems you are in the right here and can reasonably cancel the deal.

[PinkMartini]

What explanation is their Realtor giving? Can the escrow company just release it to you?

We haven't been in direct contact with their realtor... I guess Wed when our realtor calls us we'll find out what he has to say.

Isn't this fight really with the Broker? Doesn't the Broker hold escrow, not the actual seller?

In order to get our deposit back, both the sellers and us have to sign a paper stating what we're relinquishing the deposit to (inspections and the rest to us). They are refusing to sign the paper......

[hmbay]

In order to get our deposit back, both the sellers and us have to sign a paper stating what we're relinquishing the deposit to (inspections and the rest to us). They are refusing to sign the paper......

That seems odd to me. Every house I've bought (and DH is a realtor as well) the deposit or escrow check was written out to the real estate office far as I remember. It wasn't written out to the seller and the sellers broker/office held the check until closing and at that time it was credited to the seller during the closing process.

[Rose]

In California the deposit is made out to the Title Company and they hold it.

[PinkMartini]

In California the deposit is made out to the Title Company and they hold it.

Yup! We've had to write the 2 deposit checks out directly to the title co...

[pixielou]

did they cash the checks yet?

we backed out of a sale for a similar reason - couldn't come to an adjusted price agreement after a disastrous inspection. the check had never been cashed, so i just put a stop payment on it. about 6 weeks later i *finally* got my original check back.

~pixie

[nancy drew]

That seems odd to me. Every house I've bought (and DH is a realtor as well) the deposit or escrow check was written out to the real estate office far as I remember. It wasn't written out to the seller and the sellers broker/office held the check until closing and at that time it was credited to the seller during the closing process.

i just had a buyer back out (though they are actually still interested, they are total weirdos) and i had to sign a paper relinquishing the earnest money to them.

[PinkMartini]

did they cash the checks yet?

Yea, that was my first thought as well.... The checks were cashed like 2 days after we wrote them

[hmbay]

i just had a buyer back out (though they are actually still interested, they are total weirdos) and i had to sign a paper relinquishing the earnest money to them.

interesting. I've never backed out and DH has never had anyone back out so I wasn't sure if anything needed to be signed or not.

[nancy drew]

i should also add that i never saw the check, i have no idea who had it or where it was, i just had to sign some paper (probably should have read it, eh?) that said i was giving their money back. even though *i* didnt have it and had never seen it.

[PinkMartini]

Well we just got a call from our realtor and he said he told them what we planned on doing:

#1) File against them in small claims court (which would force them to come down to Ca - they live in Oregon)
#2) Go down to the county recorders office (?) and file a les pendance (sp?) - which will stop them from being able to sell their house while we're waiting to go to court (which I think at this point is a 12-15 week wait)
#3) File for $1000 in 'damages' since they've held onto our deposit unlawfully for this long

and they still won't sign over our deposit.

Sooooo I'm going to call some real estate attorneys tomorrow and see if I can find someone who will give us a consultation for a low fee to see what we should/could do. Hopefully I can find someone who doesn't charge $400/hour.

We have a contingency in our contract stating that if we can't come to an agreement on negotiations that we may rightfully exit the contract and get our deposit back. That same contingency states that if we find anything out after inspections that we don't like, didn't know about prior to offering on the house, ect that we can exit the contract and get our $$$ back.

BOTH of those fit our situation, the sellers wouldn't agree to repair what we wanted done AND we didn't know the house had a heatpump (DH wants gas heat), the air ducts in the house were too small for proper flow, ect...

So obviously I'm not an attorney but I really don't see how they could legally keep our $$$ from us when the contract states what it does. I just can't figure out why their real estate agent isn't telling them this :confused: and if he IS telling them this, why in the world are they fighting this hard?

[boilermaker]

That really sucks. I hope you can get your money back without more hassel. As for why they would be doing this, my guess would be that they already spent the money and have no way to pay you back. So they are forcing you to deal with all this crap. That would be my inclination anyhow.

[IrishEyes]

Has their realtor given any explanation as to why they think they are entitled to keep your deposit???

Did they believe your repair requests were unreasonable?

[SiValleySteph]

Ugh, that sucks!

Our realtor told us CA is a very buyer friendly state, so hopefully it won't be too hard to get the deposit back.

[pixielou]

i'm with IrishEyes - did their realtor say why they thought they were entitled to keep your deposit?

also - what type of repairs were you demanding? in my market - it's kinda tough to get sellers to do repairs. anything that is "obviously broken" - it is assumed that you made your offer price based on that. for instance, we saw 2 windows with broken glass on our house before we placed an offer. it is assumed that we took that into consideration when we made our offer. it's typically not something you can go back on after inspection.

also - one thing that struck me was your comment that the house has electric heat and you want gas. imo - that sounds more like a buyer changing their mind as opposed to an inspectional problem with the house. and if gas heat is ia deal breaker to you, maybe you should have your realtor verify the type of heat before your look at any other houses.

i hope i don't sound like an a__. just trying to look at this from maybe teh sellers point of view. i've been following your house hunt, and i *thought* i read that all your inspectional were minor - nothing of deal breaker quality - so i was a bit surprised when i saw you guys were backing out.

~pixie

[LRL]

Pinkmartini- It seems to me as though they are still not aware that they will not be able to sell their home if you file against them. I can't understand why anyone would fight this esp in the declining sellers market that we are in (at least in our area). It benefits them to get out of this quickly as it sounds like they were a little underpriced and can easily find another buyer right now.

I'm so sorry that they are still being jerks. It sounds like they are not being given the right advice from their realtor- or their realtor is seriously incompetant.

[PinkMartini]

Has their realtor given any explanation as to why they think they are entitled to keep your deposit???

Did they believe your repair requests were unreasonable?

I think at this point they just want to be greedy bastards about it. Our realtor hasn't said WHY they want to keep our money - they just want to. They probably are pissed we exited the contract...

Our realtor told us CA is a very buyer friendly state, so hopefully it won't be too hard to get the deposit back.

Well that's good to know :)

i hope i don't sound like an a__. just trying to look at this from maybe teh sellers point of view. i've been following your house hunt, and i *thought* i read that all your inspectional were minor - nothing of deal breaker quality - so i was a bit surprised when i saw you guys were backing out.

No, not at all. I am still in love with the house and honestly wish DH was a little less 'set in his ways' with what he wanted done. But with our finances as they would've been if we had bought the house we wouldn't have been able to make the repairs/changes we wanted to for a long time (probably longer than we would've stayed in the house)... So we asked them to repair some things and they didn't want to...

And as far as the repairs go - the first offer we offered had repair contingencies in it (stating that after inspections we had to right to ask for repairs/ect) so they obviously knew that there was a chance we'd want something fixed...

Pinkmartini- It seems to me as though they are still not aware that they will not be able to sell their home if you file against them. I can't understand why anyone would fight this esp in the declining sellers market that we are in (at least in our area). It benefits them to get out of this quickly as it sounds like they were a little underpriced and can easily find another buyer right now.

Yea, I can't understand it either. Either they don't care if they sell their house right now or their realtor is an idiot... And yea, our market is declining here as well...

[IrishEyes]

I guess they should have advertised that the house was being sold 'as is' if they were unwilling to do any repairs.

Did they say no to all your repair requests or just some of them? Unfortunately, just because there's a repair contingency in the offer that they signed, doesn't mean that they had to agree to anything. Sounds like a stubborn seller, and since they've moved on and they're playing hardball, it appears they don't mind waiting for another buyer.

It sounds like it's time to file in small claims court. At least that doesn't require a lawyer.

[PinkMartini]

Did they say no to all your repair requests or just some of them? Unfortunately, just because there's a repair contingency in the offer that they signed, doesn't mean that they had to agree to anything.

They said no to a few of them - the bigger ones in DH's opinions...

And yea, I realize they didn't have to agree to ANY of the repairs just because there was something in our contract - but they had to know it was a possibility. And yea, they should've stated it as 'sold as is' if they didn't want to hassle with repairs... (I see those ads all the time)

[pixielou]

i *think* "as is" is more of a real estate term to mean that the house needs lots of work - not necessarily that the seller isn't going to do any repair work. we looked at 2 or 3 houses being sold "as is" - and they were all in rough shape. kinda like the term "handyman special" - which, imo, means you practically have to be a contractor to be able to do the work.

as for the repairs - you mentioned that the sellers are out of state - so in reality, it is going to be really tough for them to do repairs - they are just not physically available to do it, handle it, coordinate it. another thing - i'm not sure about your market, but in my area, people are buying at under list price, and it seems like teh bigger discount you negotiate at offer, it seems like the less room you have to negotiate repairs. not sure if that applies in your situation.

also - a big thing with an inspecion is that the inspectors like to point out to you issues that you will have to deal with down the road. so you won't be totally surprised when the repairs become necessary. remember that you are buying and "old house" - which means there will be wear and tear, things won't be perfect and brand new, and things are going to need replacing a lot sooner than if you bought new construction.

what are the big items that they refuse to negotiate on? i re-read your post in the inspection thread, and i really don't see a whole lot of things that i would consider major sticking points to back out of a contract on. but that's just me. our inspection turned up tons more problems, and a lot more serious problems.

Well we just got home from meeting with our realtor to go over the inspection reports...

All in all they were good.

Roof is original (16 years old) and looks like it'll need to be replaced within the next 2-3 years. No leaks though.

Wood stove is missing some stability bricks that will need to be replaced.

3 of the dual pane windows are missing their seals so vapor gets in between the panes.

Screens are missing on a few of the windows.

Deck is going to need to be replaced within 10 or so years (it's un-covered).

Water heater needs to be stabalized. (State law)

Pest inspection came back ok - grounds need to be chemically treated - some boards on the deck need to be replaced - no live termites found.

A few other minor things....

imo - the roof and deck replacement are things you would need to deal with when the time comes. though the termite damage boards should be replaced.

pest spraying sounds like basic maintenance. something that you will want to be doing on a regular basis if you live in a termite area.

as for teh wood stove bricks - if it was cosmetic, i would think it's something you deal with on your own. if it makes the stove unusable - then i would ask them to repair.

with the windows missing their seal - our insepctor told us that was a cosmetic issue, adn didn't affect the efficiency of the windows. also, if the windows are already clouded, i would consider that to be something that you would have based your offer price on. same thing with missing screens - if screens were obviously missing, you base your offer price on it.

water heater stabilization - yep, sellers should take care of that if it's a code violation.

again, all this is jmo. based on my market area and my experience (we looked for a house for over a year, made offers on many, backed out of 2 contracts - learned a lot about inspections and repairs). i think overall this is a valuable learning experience for you, and hopefully it will help you to know what to look for in your next house so you can avoid situations like this again.

~pixie

[laura]

what is the escrow company doing? in my experience the sellers cannot have already spent the money (?) b/c it is held in escrow by the title company until closing - I thought? at least that is how it worked for us, also in northern california.

imo, I disagree they should have listed it "as is". I think it is reasonable for them to assume things like converting the entire house to gas are not items in their purview. wasn't that listed in the advertisement or in the preliminary paperwork? I mean, I agree they should give back your deposit if they don't want to pay to fix what you want them to, or to compromise on it, but I think they are completely w/in their rights to not want to address items of that nature. As a PP said, that really isn't 'fixing', it's changing, and that isn't the same thing.

[PinkMartini]

as for the repairs - you mentioned that the sellers are out of state - so in reality, it is going to be really tough for them to do repairs - they are just not physically available to do it, handle it, coordinate it.

Well that was never brought up as a reason they weren't willing to do the repairs... They did contact contractors here to get quotes on the stuff they were willing to repair so I don't know how 'good of an excuse' that is for them...

another thing - i'm not sure about your market, but in my area, people are buying at under list price, and it seems like teh bigger discount you negotiate at offer, it seems like the less room you have to negotiate repairs. not sure if that applies in your situation.

Not really applicable here. We offered $8k less than listing price and they countered with $5k less + another $1000 in deposit... So granted, we weren't offering ABOVE listing price, but $8k/$5k isn't that much of a discount, especially when I see people offering $20k/$30k less than asking.

again, all this is jmo. based on my market area and my experience (we looked for a house for over a year, made offers on many, backed out of 2 contracts - learned a lot about inspections and repairs). i think overall this is a valuable learning experience for you, and hopefully it will help you to know what to look for in your next house so you can avoid situations like this again.

I agree. It's definitely a learning experience. And I would've been happy with the repairs they were agreeing to, it was DH (who makes the $$$ - and knows that at the price we were offering we wouldn't have been able to make the repairs WE wanted done for a few years) who was firm on the negotiations and ultimately was the one who wanted to exit the contract. All of which we were legally able to do...

[PinkMartini]

what is the escrow company doing? in my experience the sellers cannot have already spent the money (?) b/c it is held in escrow by the title company until closing - I thought? at least that is how it worked for us, also in northern california.

Yea our deposit checks are still being held in the escrow co.

imo, I disagree they should have listed it "as is". I think it is reasonable for them to assume things like converting the entire house to gas are not items in their purview. wasn't that listed in the advertisement or in the preliminary paperwork? I mean, I agree they should give back your deposit if they don't want to pay to fix what you want them to, or to compromise on it, but I think they are completely w/in their rights to not want to address items of that nature. As a PP said, that really isn't 'fixing', it's changing, and that isn't the same thing.

No the heating info wasn't listed in the prelim paperwork. And you're right - they are totally within their rights to decide not to repair what we want done - but they AREN'T in their rights to hold onto our deposit when we can't come to an agreement... That's the problem.

[SiValleySteph]

As for "as-is" almost every house in my area is sold as-is. This included my house which was 4 years old as well as the house we just bought. Basically, it means that the sellers aren't going to do any repairs. Our house we are selling needed about $600 worth of termite work and we didn't do it. The house we just bought, we paid $2k to have it termite tented. The sellers didn't pay anything. We actually did have them fix two things because they turned up after the original inspection, so they weren't part of the "as-is." (Although, they could have refused, probably.)

[pixielou]

steph i definitely see how in your market every property would be sold as is. iirc - many houses are still selling within days of going on the market, for over list, with multiple offers.

just curious - did you actually use the term "sold as is" in you marketing literature? or is it just an assumption based on your market conditions?

~pixie

[SiValleySteph]

just curious - did you actually use the term "sold as is" in you marketing literature? or is it just an assumption based on your market conditions?


Hmmm... we didn't have it in our marketing literature, but it was written in the paperwork. It may be somewhat of an assumption. Like, for instance, all the houses we looked at (as well as ours) had inspections done ahead of time so when you are buying as is, there are no suprises. Some houses did require a substantial amount of work, but since the inspections were already done, you knew what you were looking at.

ETA - I guess my answer is that I'm not really sure. :D

[IrishEyes]

The first house we bought actually had 'as is' on the listing. The house was old old old (1876) and the sellers were up-front about the fact that they believed the house was priced low enough to offset issues with the house. We had it inspected, it had some minor issues considering the age, but we dealt with those items ourselves and yes, the price was pretty low for the neighborhood. Now, if there had been major issues with the place, we would have probably walked away anyway.

[PinkMartini]

X posted from my journal:

Well I have good news to report The sellers have signed off on the paper giving us our deposit back!!! Our real estate agent called today at 3pm telling us the title co had the signed release form and that we'd be able to get a check for the full amount sometime tommorrow!! YAY!

I wonder what made them finally decide to give it up. I have a feeling it was the les pendance (sp?) threat... Sitting with their house unable to be sold for awhile had to scare them - especially with the market here drastically on the downswing... Who knows how much more of a 'buyers market' it would be by the time we made it into court. So yay. I'm relieved. This has definitely been a learning experience for us. $660 worth...

[laura]

That is good news, PinkMartini!

FWIW - our place was not specifically marketed "as is", but it is basically assumed based on the housing market here that the sellers will not do any work. (I'm in Steph's market.) Our contract did specify we were buying "as is", outside of any contingencies that we had, but basically any negotiations would have happened via contingency on an offer (multiple offer situation, obviously) and the sellers would have just not chosen the offer w/ a lot of contingencies for them to fix things. Our realtor basically flat-out said that "as is" was the best shot at getting a multiple offer place, though in our case, everyone went for some variation of "as is" - ie. we did a termite inspection b/c that was not provided in advance, but we paid for it, things like that.

[IrishEyes]

What a relief, PinkMartini!