Buyers don't deposit earnest money

[xinerevelle]

What is the name of your state (only U.S. law)? Florida

We received an offer on our house on 10/23. It was presented that evening, but didn't include any earnest money. It said that the buyers had 2 days to deposit the money in escrow. It's a substantial sum ($20k) on an all-cash deal, so no contingencies for financing. I stipulated that I wanted to see proof that the buyer had the funds available (bank letter, etc.) by 10/27. The buyer signed that addendum on 10/26. They have not deposited the money yet, and no longer are responding to their agent's phone calls or in-person visits to their home. So now I have a contract but no money.

I asked my agent to obtain the buyer's phone number/address, but their agent was reluctant to part with that info, afraid that she would get in trouble for disclosing personal info. I will contact the broker tomorrow to get her take on all of this (luckily, both agents work for the same broker). I only have the name of the woman, but she's living in a condo temporarily and doesn't have a listed telephone number.

I had no idea until today that there were any concerns about getting these funds and now have set in motion movers, real estate agents in the new city, mortgage brokers for us, etc. to get us ready to move over 500 miles away.

What recourse do I have now?

[justalayman]

It said that the buyers had 2 days to deposit the money in escrow.

If you ever actually had a contract (I'm not sure you did but I have not read what you do have), the buyer breached the contract by not paying the $20k. Then, you went and allowed an extension until today (time?). If they do not pay the money by today, you can either consider them in breach of the contract or you can continue to try to deal with them and offer another extension, if they still want to buy.

If they breached, you would have the remedies included in your contract (if any. that is usually where the earnest money comes in) or you can attempt to sue for performance or damages.

[xinerevelle]

Thanks. That's what I figured... that I could sue for breach of contract. (Yes, I have a FL Contract for Sale and Purchase signed by both parties, but allowing 2 days for deposit of earnest money, with an addendum requiring proof of funds by today... addendum also signed by both parties.)

BUT -- I took a shot in the dark and called the condo complex where the buyers are currently living (that's ALL I know about them) and got connected to them. Turns out that they had to get the money released from the trust first, which had to be "approved" (IDK by whom) but that now that has happened and the check is scheduled to be delivered to their realtor tomorrow. I'll wait with baited breath... The woman is changing her son's school next week to the one this house is districted for, so I hope she wouldn't do that unless she really did intend to close. Fingers crossed!

[justalayman]

a trustee has to approve any actions taken concerning a trust. Without getting too involved in that situation, it can be quite complex sometimes to get money from a trust.


Hopefully all will continue as desired.

[HomeGuru]

Originally Posted by xinerevelle

What is the name of your state (only U.S. law)? Florida

We received an offer on our house on 10/23. It was presented that evening, but didn't include any earnest money. It said that the buyers had 2 days to deposit the money in escrow. It's a substantial sum ($20k) on an all-cash deal, so no contingencies for financing. I stipulated that I wanted to see proof that the buyer had the funds available (bank letter, etc.) by 10/27. The buyer signed that addendum on 10/26. They have not deposited the money yet, and no longer are responding to their agent's phone calls or in-person visits to their home. So now I have a contract but no money.

I asked my agent to obtain the buyer's phone number/address, but their agent was reluctant to part with that info, afraid that she would get in trouble for disclosing personal info. I will contact the broker tomorrow to get her take on all of this (luckily, both agents work for the same broker). I only have the name of the woman, but she's living in a condo temporarily and doesn't have a listed telephone number.

I had no idea until today that there were any concerns about getting these funds and now have set in motion movers, real estate agents in the new city, mortgage brokers for us, etc. to get us ready to move over 500 miles away.

What recourse do I have now?

**A: what recourse are you looking for. You clearly have no contract.

[xinerevelle]

The recourse I'm looking for is the $20k! Isn't that the whole point of earnest money? Does the broker (both the buyer's agent and my agent are from the same agency) have any responsibility here? Isn't it unusual to present an offer to a client without securing the earnest money? (I understand that it might take the AGENT a few days to get it deposited, but not for the buyer to actually take a couple of days to come up with money.)

I've spoken to the buyer directly again, and she said last week that her funds were now available, that she was taking her RE agent to the bank with her to verify everything, then asked if the pool company could come last weekend to measure the backyard again. Never heard from them again (and I know they are out of town now). I don't know if her funds really aren't available yet, if there never were funds, or what's the story.

I'm particularly interested in this buyer because she didn't want an appraisal, and since appraisers in my neighborhood are using REO property as comps, the appraisals have been sucking lately.

[justalayman]

=xinerevelle;2410941] (I understand that it might take the AGENT a few days to get it deposited, but not for the buyer to actually take a couple of days to come up with money.)

actually, in your situation, it would be just the opposite. Most, if not all, states require deposits to be made in a timely manner which is generally considered to be the day it was received or the first banking day after receiving the deposit.. There is no excuse for an agent to not deposit a deposit. As I stated before, if the money had to be withdrawn from a trust, it is possible for that to take some time.

I've spoken to the buyer directly again, and she said last week that her funds were now available, that she was taking her RE agent to the bank with her to verify everything, then asked if the pool company could come last weekend to measure the backyard again. Never heard from them again (and I know they are out of town now). I don't know if her funds really aren't available yet, if there never were funds, or what's the story.

so, since the deposit is required to actually make the contract complete, all you have at this time is an offer; non-binding and non-actionable if either party does not continue forward.

I'm particularly interested in this buyer because she didn't want an appraisal, and since appraisers in my neighborhood are using REO property as comps, the appraisals have been sucking lately.

you cannot just make a claim for the earnest money because paying some sort of consideration is required to make a contract an executable contract. Until that time, it is only an offer to enter into a contract. If the prospective buyer had not fulfilled their portion of the offer, then it is incomplete and non-binding on either party..

So, you either need to treat this like dead offer or you need to seek some sort of consideration to make the proposed contract an accepted contract.

What you should have done is require some earnest money to be paid immediately with the remainder of the $20k to be paid within some determined time limit. (and hold the buyer to that timeline) That way, you would have a contract you could argue to be enforced or seek remedies available if breached.

Isn't it unusual to present an offer to a client without securing the earnest money?

yes. it is not called an offer since the prospective buyer has not even fulfilled their portion of the contract they were presenting.

bottom line; if there was absolutely no consideration involved that would make this "offer" a binding contract, you have nothing.

[xinerevelle]

Thanks for the detailed reply, justalayman. I figured that since we didn't have consideration the contract wasn't worth much. I did ask for $2k (a more normal amount) deposit when they asked for a contract extension, but they couldn't come up with that, either. As for the realtor taking a few days to deposit the money, I only meant that over a weekend... yes, they should be depositing it ASAP on the next business day.

I'm still holding out hope that this buyer will come through. Again, thanks for your guidance and opinion.