Q. The first time my 82-year old mother went to see a house for sale, she gave a check for $500 of earnest money to the listing agent.
When I was questioning her about the home, she said the basement had mold up the walls in the basement from a flood. I was very concerned. She did not understand what black mold was, and she has serious allergies and is being treated for them.
My mother told the seller she was backing out of the deal and purchased another home. The seller came back and told her she had to go through with the purchase.
This is causing my mother great grief. Can a seller force you to buy their home? I thought earnest money was to be forfeited if you backed out of a deal?
A. First, did your mother sign a contract? Real estate deals must be in writing to be enforceable. Usually, when a real estate broker takes an earnest money check, the buyer has signed a purchase and sale agreement (or purchase contract).
If she signed a contract on the spot, without having an attorney approval rider or an inspection or financing contingency, then the seller may have an action for damages against your mother, and her loss may not be limited to the earnest-money deposit unless the contract specifies that.
If she had an inspection contingency and the house fails the inspection because of the mold issue, she might be able to not only back out of the contract, but also get her $500 back.
Q. I was a buyer in a short-sale transaction that did not get bank approval in time, so the contract expired. I decided to not pursue this house, and the Realtor, broker and I agreed that I would get my earnest money back.
It has been well over a month, and they are dragging their feet on sending the check back to me. They keep trying to get me to buy that same property, and I am no longer interested.
What are the next steps I can take to get my earnest money back? I am tired of asking for it and being told I will be getting it soon, and it never appears.
A. You may have to hire an attorney to make it clear that you mean business and that the money should be returned.
If the purchase and sale agreement states that you get your money back if you are unable to get financing and deliver written notice to the seller of your failure to get financing, and you complied with the terms of the contract, you should get your money back.
However, if you failed to abide by the terms of the contract, you might be in trouble. Just because you have a verbal understanding that you should get your money back, the seller could come back and say that you failed to abide by the terms of the contract and shouldn’t get the money back. A real estate attorney can give you more information on this issue.
Meanwhile, if you have a legal right to get your money back because you either complied with the terms of the contract or have written proof that the listing broker and the seller agreed to give you the money back, you should be in daily contact with the managing broker of the listing agent’s office.
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Send questions for Ilyce R. Glink to Real Estate Matters Syndicate, P.O. Box 366, Glencoe, IL 60022 or contact her at thinkglink.com.
