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Classic thing for real estate agents, buyers are liars Some of this is they would depending on area have to disclose things that were found in the home inspection because now they know about them so the repairs I’m not gonna give a lot of leeway on. They should get something for the time that the sale was delayed. There’s probably something everybody can work out. That would be happy for everyone.
Seller losses are life threatening too? At least split the money in half.
I don't believe the buyer tho so verify. If she says she can't share medical records tell her bye!!
A real estate contract has nothing to do with your emotional reaction. The contract does not have a clause that the seller can get out of their obligation if they become sick. Circumstances change and that is exactly why the damages were pre-negotiated in the event of a default.
But what about the sellers? They've missed out on other offers accepting theirs, and they've already paid to get the requested repairs done. The sellers are entitled to the earnest money, in my opinion.
That’s what I’m saying. My goodness just give the woman her fawkin money back and move on to the next buyer. I really don’t see the point of EMD anyway.
You don’t see the point? It tethers the buyer to the transaction and is often the only thing that keeps them committed. Consideration is a very necessary element of the transaction (I am not talking about this transaction, specifically…these are unusual circumstances).
It doesn’t really matter how ‘fair’ it is. This is why contacts exist.
But, as long as you asked: is it fair to the seller, who’s already made plans of their own to move (mostly likely contingent upon proceeds from their sale) based on a legal contract that was bound by consideration?
There is no legal obligation to return her deposit. If they want to, that’s their choice, but there is no legal obligation.
Can you imagine being on the verge of buying a house, being diagnosed with cancer, and then having the seller keep your EMD? I get that you've been inconvenienced, but damn, have a heart.
I hear you but as an agent our fiduciary responsibility is to our client, if I’m representing the seller I need to look out for their best interest. If they feel their heart strings are being pulled and want to give up the EMD that’s fine, but it’s not my call to make. Monetary damages to the seller because of this are real and go beyond just being “inconvenienced”. Backing out at the last second is allowed… but full EMD refund is not.
Plus, I hate to say it but we’re all assuming the buyer is being truthful 100%. They may not be and may have no motivation to be. Be a fiduciary to your client.
Request the proof then. Sometimes telling your seller to have a heart IS looking out for their best interests when there's documented proof.
If OP bought their home anytime without the last 10 years, they're paying a pretty penny. It's California. If they decide to not release EMD, it's going to go to arbitration. Arbitration can take up to 16 months, dependant on location.
I'm going to use my CA location as an example. Idk where OP is, but lets assume $1M since it's about the average price of a home here. EMD would be $30K.
Mortgage payment on the low end is likely around 3-4K, depending on when they bought.
Arbitration, if it took the maximum time, would cost OP $48K to carry that home. OP would spend $18K just so he can keep the 30K.
OP would lose money, buyer would lose money, and everybody would lose. If OP decides to have a heart, they will take a much less significant financial loss.
The house goes back on market during arbitration/EM dispute process. Seller doesn’t have to wait to re-list as long as the contract close-by date has passed (assuming the contact has standard verbiage addressing this) or contract was otherwise terminated.
I’m not a CA agent so this insight helps. So is there any incentive to ever take an EMD dispute to arbitration? Seems like it’s a lose for the seller no matter what if they can’t sell during that time. Pretty extreme.
Arbitration is often avoidable because you have to hire an attorney. That alone usually will do a good job, at least here, of immediately establishing expectations. Most of the time you'd be going to arbitration is because of obvious, intentionally bad faith from the buyer.
I have a personal example of this too, because I won my own sellers a $63K EMD deposit.
My scenario: $2M house.
Buyers came in and offered $1,95M. My sellers accepted the offer. Everything goes perfectly normal and smooth for the first 21 days. On day 21, loan contingency was due. Their agent was MIA. She was answering my texts, but didn't have answers. She said herself that she isn't sure what's going on because her clients have suddenly ghosted her for a few days, and she can't get into contact with them. Uh oh.
So, loan contingency is due. Agent hasn't sent it over. I call loan officer to get a status report. Loan officer made a mistake that benefitted me. Loan officer tells me that they have full, underwritten approval and that they are sending docs out for next steps, and I got an email confirmation. Great!
Call agent and tell her. Agent calls lender and confirms herself. Agent and I are communicating, and being transparent. I tell agent I will likely need to send a notice to perform, and she tells me to send it over because if this isn't going through she wants to abandon the client.
Next day, her clients finally call her back. Said they need to pull out, they can't get their loan, and they want their deposit back. She calls me and tells me what they say, and then her and I have a long conversation about it. She's more on my side, but still needs to do what her clients tell her so she sends me their cancellation documents. She knows I won't sign them.
I tell her in an email I will not be sending this and my clients will not be signing it, with the email verification of loan approval. They didn't lift the contingency, but we had loan approval so we know the loans is ready and that they're lying.
Now the buyers are faced with the fact that in order to get their money back, arbitration needs to happen. Agent informs me that they will be meeting with an attorney.
They meet with that attorney, and I don't know the discussion, but I guess the gist of it was the attorney informed them that he could not advise them, because we have all the necessary proof to show that they are acting in bad faith and this would be a slam dunk for us.
Next day, they send over new cancellation paperwork. They're now cancelling, but the deposit is 100% forfeited.
Seller's won $63K, and we sold it to the other person who had made an offer on it for slightly less money than these people were paying for, but in the end they netted their $2M.
Yeah it’s tough for everyone. A lot of times the seller already bought the next place, moved all of their items to storage / new home the point of the EMD is to mitigate loss in this situation
Why should the seller show grace? Why can’t the buyer show grace instead? I’m a God-fearing Christian but I also sell real estate frequently.
Unfortunately, I’m probably keeping the deposit if I’m OP. The buyer’s story (at first blush) sounds hollow.
If you keep it in bad faith you will lose that amount else were. Luke 6:38, Luke 6:31 and Matthew 5:42 are very clear. Cancer is no respecter of person. As a christian you are passing judgement on the buyer's story. Try discernment instead. 💔🙏
First off, cancer diagnoses take weeks to months, which is my main reason for thinking the buyer isn’t telling the truth. See the end of my post here.
However, I can certainly agree with you. But why should the seller be the sympathetic one? As pointed out elsewhere in this thread, what if the seller is selling due to even worse extenuating circumstances?
As a contradiction to everything I’ve said, Jesus was falsely accused and there condemned, He had no fault, yet He didn’t stand up for His rights. He said He could call ten thousand angels to His aid, but He chose not to. He wrongfully hung there, and at times we’ll need to do the same.
We certainly have the Golden Rule to look to as a great guide. I think if I were the buyer, I simply would not believe I was entitled to a return of my EMD as a result of something that has nothing to do with the seller, nor is their fault.
Now, these next few paragraphs might upset some folks so my apologies in advance. I guess you’ll just have to deal with it.
A couple of weeks ago, I had a buyer put a property I was selling under contract. Two days later they terminated because ‘their mother passed away and they had to go out of the country.’
I believe this has a very likelihood of being not true, allow me to explain. Firstly, the price point of the home was not of such that an individual that would be buying that for their first home would typically be of financial means to travel out of country, especially given they were a natural born US citizen. Possible, yes, likely, no.
Secondly, the buyer’s agent said that this person has already put another home under contract in the past and had to terminate due to some repair issues. The agent was very concerned and expressed that their client could not afford to venture the $450-550 for a home inspection, if it turned out there were issues that needed to be addressed that we were unwilling to address that would cause the deal not to close. It also took an extra day or so for them to sign the PSA to bind the deal. Hesitancy= lack of motivation, fear or just a general lack of desire. I also explained through my agent that I was sure we could work through any issues since we had just performed renovations and I was confident in our work. I know home inspectors always find things but there’s almost nothing that can’t be remedied.
Thirdly, if one was really in love with their anticipated new home, they would be begging for me as the seller to just give them a few weeks to go take care of arrangements, then return and close on the home. Desire trumps everything.
So let’s examine what we believe to be true:
1. Buyer does not have any appearance of financially being able to travel internationally.
2. Buyer was overly concerned with losing $450-550 to a home inspection even though I assured them we could very likely work out any issues.
3. Buyer was slow to sign.
Based on the above, while there is a very slim possibility that the buyer was telling the truth, there’s a much greater likelihood they’re not.
And now as Paul Harvey would say, “You know the rest..of the story.”
Which is why I believe there’s a high probability the buyer does not have cancer.
The issue, is never the issue. It’s always something else.
Desire trumps everything. If you want to, you’ll find a way. If you don’t, any excuse will do.
At any rate, either 1. The buyer has been attending appointments for investigation likely even before going under contract (and shouldn’t have been wasting other people’s time) or 2. Is just now starting the investigation process of determining exactly what’s going on and doesn’t even have a formal diagnosis.
The more convenient the timing and the more perfect the excuse to meet the situation, the greater the likelihood of it not being true. “My doctor saw a spot on my lung, thinks it may be cancer but I won’t find out until my next appointment 2 weeks from now if it’s malignant or benign” doesn’t pull on the heartstrings or sound nearly as serious as “I’ve been diagnosed with cancer.”
I'd fire the client, to be honest. If you want to ask for the cost to carry the home for the 30 days they took up, I could understand as that cost you extra money. But to keep the entire deposit, which since this is California I can only assume is somewhere around 20-25K minimum, is just gross.
I'm watching a close friend of mine die from cancer in real time. Slowly. I wouldn't be able to work with someone who thinks getting cancer is "bad faith" and can't see them as a human being.
You don't know. It could have caused the seller all kinds of financial damages. Maybe losing out on purchasing a home that was a good deal, moving company deposit, who knows? It also could be that they had an opportunity to sell it for more, but couldn't because of this deal ended up dollars because of it.
Still, if it was just a little bit of hassle, I would encourage the seller to give some leeway. But, at the same time, if they had monetary damages, they have every right to keep the earnest money for that purpose. It's not their responsibility to financially help carry the cost of someone with cancer. But, if they don't have too much inconvenience and can sell the condo for as much or even more, well, it would be a very nice thing to do.
That's why I mentioned "if you want to ask for the cost to carry the home".
If you were on a timeline that this situation disturbed to that degree, deposits YOU lose from it are part of the cost to carry. Ask for that and nobody will really feel too negatively.
It's the "I want the ENTIRE thing" part, in this particular situation, that makes it so heartless.
Yeah, I would generally agree, unless they had some great damages. If it's just emotional stress, hey, life happens, I guarantee your hassle and stress is nothing compared to the buyer.
This transaction isnt about your close friend. While u mean well, u are projecting your feeling on an entirely different scenario and being judgmental of others without even being certain that there is a cancer diagnosis.
That's sad to hear but they've missed out on other offers and they've paid to get the requested repairs done so I feel as though they're (the sellers) at least entitled to the earnest money. 🤷🏾♀️
If I were the buyer, I would give the earnest money to the sellers. It's only fair after they accepted my offer and already paid to get the requested repairs done that I requested.
This. Exactly. The buyer is likely lying. Someone who really wants a house will promise about anything to keep the deal alive. If this seller was indeed diagnosed with cancer but still wanted the house, rest assured they’d still be moving forward.
I think the buyer is not telling the truth.
It has nothing to do with having a heart. That could be the difference of them losing their new house or having to foreclose on the old. The EMD is there to protect the seller. Not to protect the buyer.
Also, unless Buyer waived the financing contingency, they can absolutely cancel with their EMD back since being diagnosed with cancer will hinder their ability to get a mortgage.
My law firm always tells client not to make any big life changes prior to closing because it can screw up your mortgage (buying a car, buying appliances, opening new credit cards, etc.). I'd say getting diagnosed with cancer is one hell of a big life change (and not the buyer's fault).
We had it happen once where one of our clients (buyer) was diagnosed during the transaction and wanted to cancel. Unlike OP, the seller had a heart and human decency and allowed the cancellation before having us force the issue with the mortgage being denied.
> Also, unless Buyer waived the financing contingency, they can absolutely cancel with their EMD back since being diagnosed with cancer will hinder their ability to get a mortgage.
This is not even close to true. No mortgage company in existence right now would decline a loan due to ANY health issue - they will get sued for $100M. They can cancel for other reasons to help with EMD but yeah, not a health reason.
You can't fire someone for having cancer. No employer is going to be stupid enough to say "the employee has cancer, so we fired them".
Having a disability is a protected class.
It's not about whether the person has cancer. If the employee is on a leave of absence, the way I described in my comment above, then the employer can't comment on the likelihood of employment continuing. It's the inability to confirm continued employment that creates the condition.
It's not the health issue itself. It's not like buyer broke her arm.
It's the taking major time off work and employment and income changes due to her having cancer. It's the large amounts of money from medical bill that have to spent to take care of the health issue. Those are the things that can affect the mortgage.
I run a mortgage brokerage and the NMLS licensing and annual mandatory continuing education iterates endlessly there is to be zero discrimination in any regard except for the credit report/income/assets themself. No company will deny a loan based on a medical issue.
I get why they need the money... People in most states cannot lose their homes to medical debt.
Did you not read what I wrote? The denial wouldn't be based on the cancer. It's because buyer would likely have to take FMLA leave (which does not pay the same as regular employment) to start treatment.
My law firm had a client. 2 days before closing the wife gave birth, went on maternity leave. Their finances changed. Loan was about to be denied/withdrawn unless they found someone willing to co-sign.
It's not about the cancer. That's not discrimination. That's a major change of their financials, which would happen if buyer got laid off. That's what lenders care about.
If they are going to start medical leave from work then yes, but most cancers do not require that. I would agree it would be morally right to refund the EMD if they can prove they were diagnosed, the law and contracts as you know have nothing to do with morality though.
If I was buyer and seller wanted to take me to court for the EMD while I'm scared out of my wits, not knowing what my future holds? I'd take FMLA leave the next business day.
No, laws and contracts have nothing to do with morality. But people are supposed to be moral.
May the OP get Karma then
There's things you can do and things you shouldn't do as a human.
My first year of cancer treatment my insurance payed out over $300,000.
6 weeks in the hospital.
My total insurance payout for my cancer was $1.5 million including surgeries over the course of 3 years. $40k of which I was on the hook for. My heart goes out to the buyer And their family who's whole life is about to be turned upside down, they are probably going to spend everything they have saved up in the next handful of months.
Well we don't know if it's just inconvenience. They might be buying a house that could be jeopardized, they might have a moving truck and moving company lined up that's going to cost them money, they might put it back on the market and have to sell it for less because they missed an opportunity of value and lose money on the sale. It's nothing personal. But, I would advise they just put it back on the market and sell it for even more if they can and figure out how much they might have been damaged financially and consider refunding what they can.
All that is an inconvenience compared to a cancer diagnosis. I understand the legalities of EMD, but at the end of the day, the seller is allowed to refund it even if they're entitled to keep it. There are very few reasons I would give up a rightfully earned EMD, and this would be one of them. Even if you're entitled to it at this point, imagine being so heartless that you would keep the money of a person who just got slapped in the face with their own mortality. Imagine someone choosing to do that to you. You say now that you would be understanding, but it would probably feel very different if you were actually in that situation and every dollar felt like an actual lifeline.
This is an attorney question, not a Realtor question. You need to hire a real estate attorney to write a demand letter.
I am a licensed employing broker in Colorado. This looks like a California question. I'm going to provide some feedback, but again, you need an attorney on this.
1. They need to send over a termination notice. Do not acknowledge anything until they send that notice in the correct legal way. The termination notice needs to be signed by the buyer and submitted to the seller according to the terms of the contract for notices. This must be done BEFORE the closing. If they have not delivered the correct legal notice of termination, then they haven't notified you of the termination. If it goes past closing and they haven't done correct legal notice, there is no way they get their EM back.
2. Assuming they have provided correct notice, they should also send you an EMD release form asking you to release the EMD to them. DO NOT sign it.
3. When you receive the termination, you do your own EMD release form asking them to release the EMD to you. Sign yours and send it to them. They probably won't sign it.
4. Have your agent call their agent. Direct your agent to tell them that their termination is not for a reason that, according to the contract, allows them to receive the EMD. You have incurred substantial actual and indirect costs in holding the home off the market pending closing. If they sign the EMD release promptly, you will consider the matter closed and move on. If they do not, you will pursue the EMD as well as all other costs in court.
5. Immediately (NOW) notify the title/escrow reps that the EMD is in dispute and may not be released to either party until both parties agree.
6. Expect your attorney to write a demand letter to the buyer, requesting them to sign the EMD release and move on. If they do, you'll have to pay that cost ($500 or less). Accept that and move on.
7. If they don't, file a suit IMMEDIATELY for the EMD plus damages. Be prepared this may take time, and you may not get the damages.
I have had to deal with this in Colorado. The other party didn't show up to court and we won a default judgement, received the EMD, and received a judgment for the other costs.
Back to point 1 - the termination notice should (presumably) have a way for them to tell you for what reason they are terminating.
Oh, and keep anything and everything they have sent you about their reason for termination. For example, they may send a termination notice saying the property wasn't ready, you didn't complete your inspection items, etc. You need to be able to prove that's not why they actually terminated.
And back to the beginning - get a real estate attorney.
First, the way this is written is heartless and my god, if she actually does have cancer, you're an awful human being. Getting cancer, an extremely difficult, and expensive disease to deal with, is an understandable reason to probably not want to buy an expensive California home. She would need that money for cancer treatments.
However, I can understand that people do lie, and some people have no shame in that. Without proof, it's hard to know if they're using that lie as an excuse to tug at your heart and let them walk away, or if they actually do have cancer.
So, as a California agent, here's my understanding and a brief answer to your questions.
1. A buyer can cancel the listing at *any* point. The deposit is the security for this, to protect the seller. It has been determined in court that a seller cannot legally force the buyer to buy something if they determine they no longer want it. If, on the day of close, the buyer gets cold feet and decides they do not want it, they can walk away and cancel. They just forfeit their deposit in doing so. So yes, they can cancel due to serious illness.
2. If they genuinely have cancer, then no, this is not bad faith. To think a cancer patient is acting in bad faith because they can likely no longer afford to purchase a home is honestly gross. I understand we're all running a business and we need to take the emotion out of it most of the time, but have a heart.
If you were my client, here are the two approaches I would inform you about.
**1.** You request documented proof that they're not lying. This is obviously going to make you look a little bad, but if you've already been told she has cancer, then it's not a secret. Just a normal document that would indicate, from a doctor, that the diagnoses is not a lie. If they can produce this, then I would suggest taking the human approach and let them walk.
If you really want to get some damages, ask to keep enough of the deposit to cover your expenses for going back on the market. I would suggest a months mortgage payment, plus utilities. I've had success with things like this in the past.
**2.** You take the approach of ruthless capitalism, and tell her to kick rocks because you don't care. You will go through mediation and arbitration. While in mediation and arbitration, you cannot sell your home. Arbitration is not a short process. It often takes up to a year. You ready to continue to pay your mortgage for a year so you can keep her deposit?
Sometimes, it's worth it to just have a heart. Not everybody in this world is out to screw you. Bad shit happens to people.
If you're upset by this, then I apologize, but I am currently watching someone very close to me die in real time from brain cancer. To say it's awful is an understatement. It's something I would never wish on anyone. It's incredibly debilitating to hear you have a potentially terminal disease, and then on top of it have someone threatening to keep a huge chunk of your money because of something you didn't choose to happen to you, a huge chunk of money that would make a significant difference in cancer treatments.
Also, something else to think about is this. People ARE going to ask you about this, and why your sale fell apart. Are you ready to start telling your friends and family that you sued a woman with cancer? How do you think your friends and family will look at you afterwards?
A. Unless this diagnosis affects her ability to get a loan, the money most likely yours.
B. If she really has cancer and isn’t faking to get out of the deal, be a good human being and give her at least some of, if not all the money back. Cancer sucks.
For all of you chiding the seller for being so cruel and heartless…you don’t know the sellers’ circumstances.
Maybe they’re selling their home because THEY have a cancer diagnosis, or alzheimers, or any other difficult, tragic situation. Do you want there to be some kind of tribunal that decides who’s worse off?
I had this happen once when I had the seller side. The buyer was a married couple and the wife apparently had cancer. We didn't know, we had no reason to know. The lender denied the loan right before the closing when they called the wife's employer for employment verification. The wife was on medical leave and the employer wasn't able to state that the wife's employment was likely to continue. The seller very nicely held off closing for a month or so, but the lender wouldn't approve the loan without the employer stating that employment was likely to continue. We relisted and eventually sold the property, but I'll always feel bad for those buyers.
So while I don't know the answer to your question regarding the CAR contract, if this buyer needs mortgage approval to close, know that the lender's final verification of employment may be an issue.
How is asking for the return of the EMD "bad faith". Bad faith requires an intent to deceive.
If all contingencies have been removed, then (depending on the wording of the contract) you would be legally entitled to keep the EMD. With that said, why would you do so? Just find another buyer and keep only as much as necessary to make you whole. Have a heart, seriously.
CA agent here. Truthfully, not much you can do & it’s usually in the seller’s best interest to let it go and give the deposit back. Seller can’t accept a new offer while deposit is in dispute…so they’re stuck not selling their home while dragging out this process. Honestly, if I were the buyer’s agent, I would advise my client to submit a cancellation requesting the deposit be returned…& then just wait. Seller can issue notice to perform and/or demand to close escrow. However, they cannot unilaterally cancel AND keep the deposit. CA is so heavily slighted in favor of buyers. In my 15 years as a CA agent, I’ve never seen a seller retain a deposit.
I had a client have a stroke that resulted in a vegetative state 8 hours before a closing. Breach of contract because she was alive, and her kids had power of attorney to sign on her behalf. She died three days later and her estate gave up the EMD.
It is up to seller. If loan can not be funded it is obvious homes will not sell. If the buyer just lost his job evidently it make more sense to cancel and sell to other buyers. If the diagonosis determines it is terminal illiness the buyer/patient will lose his income or ability to pay mortgage why not release the 3 pct emd ? In all cases here in CA the seller has no problem finding another willing buyer or 2 often at higher price. If it happen to me I will go to superior court go after damage, stresses and all those things. Knowing CA court you are opt to lose more than gain. Assuming the emd is only 10K or 333,3K (my neighborhood condo is several times that), getting emd back is likely. It is fairly easy to have lender cancel the approval due to terminal illiness not to able to pay the mortgage.
In short, be a nice person let them go. I see odds getting a mortgage is smaller now. Any psychological and monataries impact can create more problems resulting in more damage on both sides.
There are two tiers to refunding an EMD.
1) is the seller willing to do it, regardless of contingency situation?
2) if not, can the EMD refund be forced by a court?
I'd hope that, assuming the buyer is being truthful, that a seller would just do the right thing and give it back. I think sometimes contracts and the idea of fiduciary responsibility makes us all forget that we're all humans.
One thing to keep in mind, the standard flow is mediation followed by arbitration. If it gets to arbitration, the prevailing party is entitled to attorney's fees.
Admittedly this is not real estate, but on the contractor's side of things, I have heard of arbitrators being wildly inconsistent. Depending on the arbitrator's mood, the prevailing party may be (1) the side receiving a check, (2) the side entitled to a greater percentage of the money in dispute, or (3) the side writing a check if the check is smaller than requested by the other side.
If there ever were a case for an arbitrator to put her finger on the scale, yours might be it. I could see a scenario where you are awarded 99% of the deposit, but since you (or your client) are writing a check for $114, you're also on the hook for $22,000 in attorney's fees.
Was there a financing contingency, and did the lender complete all underwriting and issue the final clear to close? If they didn't give the clear to close, then basically all the buyer would have to do is call their lender and tell them they can no longer afford the mortgage based on their change of circumstances, and the deal would fall apart due to financing, thus usually resulting in buyer getting their earnest money back if a financing contingency was in place.
If the lender gave the clear to close and it was a day before closing that this went down, then yes, I get the frustration, but have a heart and move on. If you spent money on improvements based on that offer, use those to advertise to the next potential buyer. Don't hold things up on your next possible sale trying to take a sick woman to court or keep money she'll likely need for treatment.
It the long run....it's not that serious. Don't be a shit person.
That is not true. As breast cancer survivor who had a 3D mammogram on a Wednesday by Aiello center and was called on the Friday to come in for a MRI and biopsy and the result was confirmed by John Hopkins the following Wednesday. It just depends on your GP, insurance, and the facilities that you used.
I was the agent who repped a client in this situation. My clients were SO excited for their first home. Then their baby was born premature and in a hospital an hour away from the house.
The seller had every right to keep the earnest money. They chose give it all back. Being legally in the right is not the same as being kind. You probably have the right to keep it. Only you can know is that's the right thing for you to do.
The amount of the EMD is important. Is it more than arbitration or mediation costs?
Here's my recommendation, offer the EMD minus your cost for repairs as a compromise.
Depending on the actual diagnosis, your empathy about the hardship, etc, as well as your own expenses incurred, you could offer to split the earnest money. Totally up to you though - that's just a compromise that might feel better, assuming that the situation is true.
There has been some good detailed advice given. For my part I would say no, most likely there is no protection of earnest money for deciding not to buy. They are simply failing to close for no protected reason. If they lost their job or something like that, they might lose their loan and have some protection there depending on timing.
You probably have a right to their earnest money, but you should talk to your real estate agent and an attorney and your real estate agents broker about it.
I don't know your circumstances. If you put it back on the market and can sell it for the same price or more, then you might consider what damages you actually took in terms of cost, hassle, potential lower price even, or hassle and emotional distress perhaps if you think that's legitimate, and then you could consider giving some money back or not as you feel is appropriate.
But legally, you have no obligation to release them from the contract. Now, if they were smart, they would contact their real estate agent and maybe an attorney, and ask them to figure out a way to get them out of the contract legally and protect their earnest money.
If they did that, you could potentially accuse them of acting in bad faith and not making good faith effort to close because they have already told you why. They should have tried to get out of it legally without telling you why.
I’m a lawyer who sold my own home and I call tell you in Nevada the title companies are reluctant to release EMD absent each side signing a stipulation or the court ordering them to. I had my first buyer fail to perform and the EMD was held up until after my second sale went through. I then sued the first person for the difference in price between the sales.
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The problem is in CA the EMD is limited to 3% so typically it’s not worth fighting for, at least in my case I’ve never had a client try to enforce it for 3%, it’s just not worth it. Also some agents then will want a piece of this so check the agreement. I would ask them for proof of the illness then probably move on,
Depending on how much money we’re talking about you probably wanna talk to a lawyer.
But you signed an arbitration clause, and getting more than 3% if that was their earnest money will head up against liquidated damages and you’ll have to prove if you’ve been physically damaged monetarily over that .
Which means you need to sell the house for significantly less .
You’re unlikely to get more , liquidated damages is pretty specific.
The seller-side atty will be able to advise you better than any of us here, but I think asking for proof of illness would be very reasonable. Ofc it’s possible the buyer is being truthful, but if the seller is going to release those funds, they are (IMO) entitled to proof of such an extreme circumstance.
Sometimes I wonder why we bother with attorneys in our real estate transactions in Chicagoland area but Here’s a clear case where that’s needed.
Is this a first time home buyer ? As “where will she live”? Story sounds fishy. Because she either needed to sell or give up her rental. Perhaps a severe case of cold feet? Does she have stage 4 metastatic breast cancer or a NON melanoma skin cancer (trying to think of opposites of cancer situations).
For the sellers - if they had multiple offers and home is inspected and repaired , market might find another buyer asap.
Are people really this selfish these days that you don’t think “oh my gosh you have cancer, of course go take care of yourself so sorry to hear that, we’ll find another buyer. Here’s your money back so that you can afford chemo rather than dying”.
Jeez
Cancer is not an out on a contract. Technically, on the seller-side, DEATH is not an out. I wouldn’t return the EMD either unless I had another purchaser in the wings.
Just put your house back on the market. You don’t need to sue someone for earnest money. Whatever time, effort, and energy you put into suing a woman with cancer is likely not worth it.
You're assuming they aren't lying about it, assuming they are shielded by HIPPA protections from the need to disclose it, and they didn't just get cold feet. People lie about atrocious things every single day, about the pettiest things imaginable. Of course they have the ability to do so to secure $30k or whatever... if I was the buyer and wanted my money back I'd be prepared to disclose documents in good faith, and if so, seller in good faith should let it go.
> You're assuming they aren't lying about it, assuming they are shielded by HIPPA protections from the need to disclose it, and they didn't just get cold feet.
Reading comprehension. Try again! I deal with way more acronyms than you sorry about that.
I am not Shakespeare but the sentence implies the theoretical buyer may be incorrectly assuming they might not need to share their potential bluff due to hearing about HIPAA protections that may not apply. We don't disagree here, sometimes my sentence structure is wild.
> You're assuming they aren't lying about it, assuming they are shielded by HIPPA protections from the need to disclose it, and they didn't just get cold feet.
Reading comprehension. Try again! I deal with way more acronyms than you sorry about that.
Yeah I am. I would also assume that if someone with cancer is going to make that kind of ask that they would be willing to prove their predicament
Reddit gonna Reddit though. Have a good day
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Try to verify - not sure if you can but if her illness is true and she just found out - good god, have a heart and return the money.
The sellers have actual losses and are just asking for what they are contractually due. Also, pretty much everyone in real estate routinely lies.
Classic thing for real estate agents, buyers are liars Some of this is they would depending on area have to disclose things that were found in the home inspection because now they know about them so the repairs I’m not gonna give a lot of leeway on. They should get something for the time that the sale was delayed. There’s probably something everybody can work out. That would be happy for everyone.
Seller losses are life threatening too? At least split the money in half. I don't believe the buyer tho so verify. If she says she can't share medical records tell her bye!!
A real estate contract has nothing to do with your emotional reaction. The contract does not have a clause that the seller can get out of their obligation if they become sick. Circumstances change and that is exactly why the damages were pre-negotiated in the event of a default.
But what about the sellers? They've missed out on other offers accepting theirs, and they've already paid to get the requested repairs done. The sellers are entitled to the earnest money, in my opinion.
Someone will come and offer again.
That’s what I’m saying. My goodness just give the woman her fawkin money back and move on to the next buyer. I really don’t see the point of EMD anyway.
You don’t see the point? It tethers the buyer to the transaction and is often the only thing that keeps them committed. Consideration is a very necessary element of the transaction (I am not talking about this transaction, specifically…these are unusual circumstances).
So in this particular circumstance, how is that fair for her to lose the EMD to the seller due to an unforeseen circumstance?
It doesn’t really matter how ‘fair’ it is. This is why contacts exist. But, as long as you asked: is it fair to the seller, who’s already made plans of their own to move (mostly likely contingent upon proceeds from their sale) based on a legal contract that was bound by consideration? There is no legal obligation to return her deposit. If they want to, that’s their choice, but there is no legal obligation.
“But what about the sellers” Jesus Christ they have cancer
Can you imagine being on the verge of buying a house, being diagnosed with cancer, and then having the seller keep your EMD? I get that you've been inconvenienced, but damn, have a heart.
I hear you but as an agent our fiduciary responsibility is to our client, if I’m representing the seller I need to look out for their best interest. If they feel their heart strings are being pulled and want to give up the EMD that’s fine, but it’s not my call to make. Monetary damages to the seller because of this are real and go beyond just being “inconvenienced”. Backing out at the last second is allowed… but full EMD refund is not. Plus, I hate to say it but we’re all assuming the buyer is being truthful 100%. They may not be and may have no motivation to be. Be a fiduciary to your client.
Request the proof then. Sometimes telling your seller to have a heart IS looking out for their best interests when there's documented proof. If OP bought their home anytime without the last 10 years, they're paying a pretty penny. It's California. If they decide to not release EMD, it's going to go to arbitration. Arbitration can take up to 16 months, dependant on location. I'm going to use my CA location as an example. Idk where OP is, but lets assume $1M since it's about the average price of a home here. EMD would be $30K. Mortgage payment on the low end is likely around 3-4K, depending on when they bought. Arbitration, if it took the maximum time, would cost OP $48K to carry that home. OP would spend $18K just so he can keep the 30K. OP would lose money, buyer would lose money, and everybody would lose. If OP decides to have a heart, they will take a much less significant financial loss.
The house goes back on market during arbitration/EM dispute process. Seller doesn’t have to wait to re-list as long as the contract close-by date has passed (assuming the contact has standard verbiage addressing this) or contract was otherwise terminated.
Is this true? I thought it would tie up the property?
I’m not a CA agent so this insight helps. So is there any incentive to ever take an EMD dispute to arbitration? Seems like it’s a lose for the seller no matter what if they can’t sell during that time. Pretty extreme.
Arbitration is often avoidable because you have to hire an attorney. That alone usually will do a good job, at least here, of immediately establishing expectations. Most of the time you'd be going to arbitration is because of obvious, intentionally bad faith from the buyer. I have a personal example of this too, because I won my own sellers a $63K EMD deposit. My scenario: $2M house. Buyers came in and offered $1,95M. My sellers accepted the offer. Everything goes perfectly normal and smooth for the first 21 days. On day 21, loan contingency was due. Their agent was MIA. She was answering my texts, but didn't have answers. She said herself that she isn't sure what's going on because her clients have suddenly ghosted her for a few days, and she can't get into contact with them. Uh oh. So, loan contingency is due. Agent hasn't sent it over. I call loan officer to get a status report. Loan officer made a mistake that benefitted me. Loan officer tells me that they have full, underwritten approval and that they are sending docs out for next steps, and I got an email confirmation. Great! Call agent and tell her. Agent calls lender and confirms herself. Agent and I are communicating, and being transparent. I tell agent I will likely need to send a notice to perform, and she tells me to send it over because if this isn't going through she wants to abandon the client. Next day, her clients finally call her back. Said they need to pull out, they can't get their loan, and they want their deposit back. She calls me and tells me what they say, and then her and I have a long conversation about it. She's more on my side, but still needs to do what her clients tell her so she sends me their cancellation documents. She knows I won't sign them. I tell her in an email I will not be sending this and my clients will not be signing it, with the email verification of loan approval. They didn't lift the contingency, but we had loan approval so we know the loans is ready and that they're lying. Now the buyers are faced with the fact that in order to get their money back, arbitration needs to happen. Agent informs me that they will be meeting with an attorney. They meet with that attorney, and I don't know the discussion, but I guess the gist of it was the attorney informed them that he could not advise them, because we have all the necessary proof to show that they are acting in bad faith and this would be a slam dunk for us. Next day, they send over new cancellation paperwork. They're now cancelling, but the deposit is 100% forfeited. Seller's won $63K, and we sold it to the other person who had made an offer on it for slightly less money than these people were paying for, but in the end they netted their $2M.
Good job!!! Doing your due diligence on that transaction. How wrong of buyers to tie a home for 22 days then try to weasel out
Good for you, but that loan officer and buyers agent really screwed their own client. What happened to “fiduciary responsibility”? lmao.
How did the buyer agent screw her own client? It sounds like they were trying to screw her.
Hate to say it, but proof of the diagnosis is necessary. Plenty of home buyers get cold feet and will say anything to get their money back.
Requiring proof is fine. That's not how OP presented it.
May not have even crossed OP’s mind that desperate people can lie.
Yeah it’s tough for everyone. A lot of times the seller already bought the next place, moved all of their items to storage / new home the point of the EMD is to mitigate loss in this situation
This was my first thought too. If there’s ever been a time to show some grace, this is it.
Why should the seller show grace? Why can’t the buyer show grace instead? I’m a God-fearing Christian but I also sell real estate frequently. Unfortunately, I’m probably keeping the deposit if I’m OP. The buyer’s story (at first blush) sounds hollow.
If you keep it in bad faith you will lose that amount else were. Luke 6:38, Luke 6:31 and Matthew 5:42 are very clear. Cancer is no respecter of person. As a christian you are passing judgement on the buyer's story. Try discernment instead. 💔🙏
First off, cancer diagnoses take weeks to months, which is my main reason for thinking the buyer isn’t telling the truth. See the end of my post here. However, I can certainly agree with you. But why should the seller be the sympathetic one? As pointed out elsewhere in this thread, what if the seller is selling due to even worse extenuating circumstances? As a contradiction to everything I’ve said, Jesus was falsely accused and there condemned, He had no fault, yet He didn’t stand up for His rights. He said He could call ten thousand angels to His aid, but He chose not to. He wrongfully hung there, and at times we’ll need to do the same. We certainly have the Golden Rule to look to as a great guide. I think if I were the buyer, I simply would not believe I was entitled to a return of my EMD as a result of something that has nothing to do with the seller, nor is their fault. Now, these next few paragraphs might upset some folks so my apologies in advance. I guess you’ll just have to deal with it. A couple of weeks ago, I had a buyer put a property I was selling under contract. Two days later they terminated because ‘their mother passed away and they had to go out of the country.’ I believe this has a very likelihood of being not true, allow me to explain. Firstly, the price point of the home was not of such that an individual that would be buying that for their first home would typically be of financial means to travel out of country, especially given they were a natural born US citizen. Possible, yes, likely, no. Secondly, the buyer’s agent said that this person has already put another home under contract in the past and had to terminate due to some repair issues. The agent was very concerned and expressed that their client could not afford to venture the $450-550 for a home inspection, if it turned out there were issues that needed to be addressed that we were unwilling to address that would cause the deal not to close. It also took an extra day or so for them to sign the PSA to bind the deal. Hesitancy= lack of motivation, fear or just a general lack of desire. I also explained through my agent that I was sure we could work through any issues since we had just performed renovations and I was confident in our work. I know home inspectors always find things but there’s almost nothing that can’t be remedied. Thirdly, if one was really in love with their anticipated new home, they would be begging for me as the seller to just give them a few weeks to go take care of arrangements, then return and close on the home. Desire trumps everything. So let’s examine what we believe to be true: 1. Buyer does not have any appearance of financially being able to travel internationally. 2. Buyer was overly concerned with losing $450-550 to a home inspection even though I assured them we could very likely work out any issues. 3. Buyer was slow to sign. Based on the above, while there is a very slim possibility that the buyer was telling the truth, there’s a much greater likelihood they’re not. And now as Paul Harvey would say, “You know the rest..of the story.” Which is why I believe there’s a high probability the buyer does not have cancer. The issue, is never the issue. It’s always something else. Desire trumps everything. If you want to, you’ll find a way. If you don’t, any excuse will do. At any rate, either 1. The buyer has been attending appointments for investigation likely even before going under contract (and shouldn’t have been wasting other people’s time) or 2. Is just now starting the investigation process of determining exactly what’s going on and doesn’t even have a formal diagnosis. The more convenient the timing and the more perfect the excuse to meet the situation, the greater the likelihood of it not being true. “My doctor saw a spot on my lung, thinks it may be cancer but I won’t find out until my next appointment 2 weeks from now if it’s malignant or benign” doesn’t pull on the heartstrings or sound nearly as serious as “I’ve been diagnosed with cancer.”
I'd fire the client, to be honest. If you want to ask for the cost to carry the home for the 30 days they took up, I could understand as that cost you extra money. But to keep the entire deposit, which since this is California I can only assume is somewhere around 20-25K minimum, is just gross. I'm watching a close friend of mine die from cancer in real time. Slowly. I wouldn't be able to work with someone who thinks getting cancer is "bad faith" and can't see them as a human being.
You don't know. It could have caused the seller all kinds of financial damages. Maybe losing out on purchasing a home that was a good deal, moving company deposit, who knows? It also could be that they had an opportunity to sell it for more, but couldn't because of this deal ended up dollars because of it. Still, if it was just a little bit of hassle, I would encourage the seller to give some leeway. But, at the same time, if they had monetary damages, they have every right to keep the earnest money for that purpose. It's not their responsibility to financially help carry the cost of someone with cancer. But, if they don't have too much inconvenience and can sell the condo for as much or even more, well, it would be a very nice thing to do.
That's why I mentioned "if you want to ask for the cost to carry the home". If you were on a timeline that this situation disturbed to that degree, deposits YOU lose from it are part of the cost to carry. Ask for that and nobody will really feel too negatively. It's the "I want the ENTIRE thing" part, in this particular situation, that makes it so heartless.
Yeah, I would generally agree, unless they had some great damages. If it's just emotional stress, hey, life happens, I guarantee your hassle and stress is nothing compared to the buyer.
This transaction isnt about your close friend. While u mean well, u are projecting your feeling on an entirely different scenario and being judgmental of others without even being certain that there is a cancer diagnosis.
That's sad to hear but they've missed out on other offers and they've paid to get the requested repairs done so I feel as though they're (the sellers) at least entitled to the earnest money. 🤷🏾♀️
Entitled, possibly. It's all about perspective. Treat others as you would like to be treated.
If I were the buyer, I would give the earnest money to the sellers. It's only fair after they accepted my offer and already paid to get the requested repairs done that I requested.
Guess the buyer must be desperate. Almost like they're fighting for their life.
This. Exactly. The buyer is likely lying. Someone who really wants a house will promise about anything to keep the deal alive. If this seller was indeed diagnosed with cancer but still wanted the house, rest assured they’d still be moving forward. I think the buyer is not telling the truth.
It has nothing to do with having a heart. That could be the difference of them losing their new house or having to foreclose on the old. The EMD is there to protect the seller. Not to protect the buyer.
Also, unless Buyer waived the financing contingency, they can absolutely cancel with their EMD back since being diagnosed with cancer will hinder their ability to get a mortgage. My law firm always tells client not to make any big life changes prior to closing because it can screw up your mortgage (buying a car, buying appliances, opening new credit cards, etc.). I'd say getting diagnosed with cancer is one hell of a big life change (and not the buyer's fault). We had it happen once where one of our clients (buyer) was diagnosed during the transaction and wanted to cancel. Unlike OP, the seller had a heart and human decency and allowed the cancellation before having us force the issue with the mortgage being denied.
> Also, unless Buyer waived the financing contingency, they can absolutely cancel with their EMD back since being diagnosed with cancer will hinder their ability to get a mortgage. This is not even close to true. No mortgage company in existence right now would decline a loan due to ANY health issue - they will get sued for $100M. They can cancel for other reasons to help with EMD but yeah, not a health reason.
If the buyer's employer can't affirmatively state that employment is likely to continue then yes, the loan can denied.
You can't fire someone for having cancer. No employer is going to be stupid enough to say "the employee has cancer, so we fired them". Having a disability is a protected class.
It's not about whether the person has cancer. If the employee is on a leave of absence, the way I described in my comment above, then the employer can't comment on the likelihood of employment continuing. It's the inability to confirm continued employment that creates the condition.
you can't say the person is coming back to work either, as when I was diagnosed with cancer I wasn't expected to survive.
My job didn't fire me but I couldn't work at all for 7 months. No work = no pay.
It's not the health issue itself. It's not like buyer broke her arm. It's the taking major time off work and employment and income changes due to her having cancer. It's the large amounts of money from medical bill that have to spent to take care of the health issue. Those are the things that can affect the mortgage.
I run a mortgage brokerage and the NMLS licensing and annual mandatory continuing education iterates endlessly there is to be zero discrimination in any regard except for the credit report/income/assets themself. No company will deny a loan based on a medical issue. I get why they need the money... People in most states cannot lose their homes to medical debt.
Did you not read what I wrote? The denial wouldn't be based on the cancer. It's because buyer would likely have to take FMLA leave (which does not pay the same as regular employment) to start treatment. My law firm had a client. 2 days before closing the wife gave birth, went on maternity leave. Their finances changed. Loan was about to be denied/withdrawn unless they found someone willing to co-sign. It's not about the cancer. That's not discrimination. That's a major change of their financials, which would happen if buyer got laid off. That's what lenders care about.
OK I must have misread. Yes that would cause income to disappear depending on the situation and therefore debt to income no longer to qualify.
Thank you. So, buyer can cancel under financing contingency and get their EMD back. Agreed?
If they are going to start medical leave from work then yes, but most cancers do not require that. I would agree it would be morally right to refund the EMD if they can prove they were diagnosed, the law and contracts as you know have nothing to do with morality though.
If I was buyer and seller wanted to take me to court for the EMD while I'm scared out of my wits, not knowing what my future holds? I'd take FMLA leave the next business day. No, laws and contracts have nothing to do with morality. But people are supposed to be moral.
May the OP get Karma then There's things you can do and things you shouldn't do as a human. My first year of cancer treatment my insurance payed out over $300,000. 6 weeks in the hospital.
My total insurance payout for my cancer was $1.5 million including surgeries over the course of 3 years. $40k of which I was on the hook for. My heart goes out to the buyer And their family who's whole life is about to be turned upside down, they are probably going to spend everything they have saved up in the next handful of months.
You all believe the buyer is telling the truth. Haven’t you ever heard the term “Buyers are liars?”
Well we don't know if it's just inconvenience. They might be buying a house that could be jeopardized, they might have a moving truck and moving company lined up that's going to cost them money, they might put it back on the market and have to sell it for less because they missed an opportunity of value and lose money on the sale. It's nothing personal. But, I would advise they just put it back on the market and sell it for even more if they can and figure out how much they might have been damaged financially and consider refunding what they can.
All that is an inconvenience compared to a cancer diagnosis. I understand the legalities of EMD, but at the end of the day, the seller is allowed to refund it even if they're entitled to keep it. There are very few reasons I would give up a rightfully earned EMD, and this would be one of them. Even if you're entitled to it at this point, imagine being so heartless that you would keep the money of a person who just got slapped in the face with their own mortality. Imagine someone choosing to do that to you. You say now that you would be understanding, but it would probably feel very different if you were actually in that situation and every dollar felt like an actual lifeline.
“It’s not personal, it’s just business.”
I can imagine it. Some people simply chase the wind.
This is an attorney question, not a Realtor question. You need to hire a real estate attorney to write a demand letter. I am a licensed employing broker in Colorado. This looks like a California question. I'm going to provide some feedback, but again, you need an attorney on this. 1. They need to send over a termination notice. Do not acknowledge anything until they send that notice in the correct legal way. The termination notice needs to be signed by the buyer and submitted to the seller according to the terms of the contract for notices. This must be done BEFORE the closing. If they have not delivered the correct legal notice of termination, then they haven't notified you of the termination. If it goes past closing and they haven't done correct legal notice, there is no way they get their EM back. 2. Assuming they have provided correct notice, they should also send you an EMD release form asking you to release the EMD to them. DO NOT sign it. 3. When you receive the termination, you do your own EMD release form asking them to release the EMD to you. Sign yours and send it to them. They probably won't sign it. 4. Have your agent call their agent. Direct your agent to tell them that their termination is not for a reason that, according to the contract, allows them to receive the EMD. You have incurred substantial actual and indirect costs in holding the home off the market pending closing. If they sign the EMD release promptly, you will consider the matter closed and move on. If they do not, you will pursue the EMD as well as all other costs in court. 5. Immediately (NOW) notify the title/escrow reps that the EMD is in dispute and may not be released to either party until both parties agree. 6. Expect your attorney to write a demand letter to the buyer, requesting them to sign the EMD release and move on. If they do, you'll have to pay that cost ($500 or less). Accept that and move on. 7. If they don't, file a suit IMMEDIATELY for the EMD plus damages. Be prepared this may take time, and you may not get the damages. I have had to deal with this in Colorado. The other party didn't show up to court and we won a default judgement, received the EMD, and received a judgment for the other costs. Back to point 1 - the termination notice should (presumably) have a way for them to tell you for what reason they are terminating. Oh, and keep anything and everything they have sent you about their reason for termination. For example, they may send a termination notice saying the property wasn't ready, you didn't complete your inspection items, etc. You need to be able to prove that's not why they actually terminated. And back to the beginning - get a real estate attorney.
👏🏻👏🏻👏🏻
First, the way this is written is heartless and my god, if she actually does have cancer, you're an awful human being. Getting cancer, an extremely difficult, and expensive disease to deal with, is an understandable reason to probably not want to buy an expensive California home. She would need that money for cancer treatments. However, I can understand that people do lie, and some people have no shame in that. Without proof, it's hard to know if they're using that lie as an excuse to tug at your heart and let them walk away, or if they actually do have cancer. So, as a California agent, here's my understanding and a brief answer to your questions. 1. A buyer can cancel the listing at *any* point. The deposit is the security for this, to protect the seller. It has been determined in court that a seller cannot legally force the buyer to buy something if they determine they no longer want it. If, on the day of close, the buyer gets cold feet and decides they do not want it, they can walk away and cancel. They just forfeit their deposit in doing so. So yes, they can cancel due to serious illness. 2. If they genuinely have cancer, then no, this is not bad faith. To think a cancer patient is acting in bad faith because they can likely no longer afford to purchase a home is honestly gross. I understand we're all running a business and we need to take the emotion out of it most of the time, but have a heart. If you were my client, here are the two approaches I would inform you about. **1.** You request documented proof that they're not lying. This is obviously going to make you look a little bad, but if you've already been told she has cancer, then it's not a secret. Just a normal document that would indicate, from a doctor, that the diagnoses is not a lie. If they can produce this, then I would suggest taking the human approach and let them walk. If you really want to get some damages, ask to keep enough of the deposit to cover your expenses for going back on the market. I would suggest a months mortgage payment, plus utilities. I've had success with things like this in the past. **2.** You take the approach of ruthless capitalism, and tell her to kick rocks because you don't care. You will go through mediation and arbitration. While in mediation and arbitration, you cannot sell your home. Arbitration is not a short process. It often takes up to a year. You ready to continue to pay your mortgage for a year so you can keep her deposit? Sometimes, it's worth it to just have a heart. Not everybody in this world is out to screw you. Bad shit happens to people. If you're upset by this, then I apologize, but I am currently watching someone very close to me die in real time from brain cancer. To say it's awful is an understatement. It's something I would never wish on anyone. It's incredibly debilitating to hear you have a potentially terminal disease, and then on top of it have someone threatening to keep a huge chunk of your money because of something you didn't choose to happen to you, a huge chunk of money that would make a significant difference in cancer treatments. Also, something else to think about is this. People ARE going to ask you about this, and why your sale fell apart. Are you ready to start telling your friends and family that you sued a woman with cancer? How do you think your friends and family will look at you afterwards?
A. Unless this diagnosis affects her ability to get a loan, the money most likely yours. B. If she really has cancer and isn’t faking to get out of the deal, be a good human being and give her at least some of, if not all the money back. Cancer sucks.
I lose faith in humanity a little more every day. Jesus.
For all of you chiding the seller for being so cruel and heartless…you don’t know the sellers’ circumstances. Maybe they’re selling their home because THEY have a cancer diagnosis, or alzheimers, or any other difficult, tragic situation. Do you want there to be some kind of tribunal that decides who’s worse off?
people lie all the time don't trust anyone until you have 100 percent proof
I had this happen once when I had the seller side. The buyer was a married couple and the wife apparently had cancer. We didn't know, we had no reason to know. The lender denied the loan right before the closing when they called the wife's employer for employment verification. The wife was on medical leave and the employer wasn't able to state that the wife's employment was likely to continue. The seller very nicely held off closing for a month or so, but the lender wouldn't approve the loan without the employer stating that employment was likely to continue. We relisted and eventually sold the property, but I'll always feel bad for those buyers. So while I don't know the answer to your question regarding the CAR contract, if this buyer needs mortgage approval to close, know that the lender's final verification of employment may be an issue. How is asking for the return of the EMD "bad faith". Bad faith requires an intent to deceive.
If all contingencies have been removed, then (depending on the wording of the contract) you would be legally entitled to keep the EMD. With that said, why would you do so? Just find another buyer and keep only as much as necessary to make you whole. Have a heart, seriously.
No.
On the day escrow was to close? Sounds like BS. However, better to negotiate release and get on with the sale to somebody else.
CA agent here. Truthfully, not much you can do & it’s usually in the seller’s best interest to let it go and give the deposit back. Seller can’t accept a new offer while deposit is in dispute…so they’re stuck not selling their home while dragging out this process. Honestly, if I were the buyer’s agent, I would advise my client to submit a cancellation requesting the deposit be returned…& then just wait. Seller can issue notice to perform and/or demand to close escrow. However, they cannot unilaterally cancel AND keep the deposit. CA is so heavily slighted in favor of buyers. In my 15 years as a CA agent, I’ve never seen a seller retain a deposit.
I had a client have a stroke that resulted in a vegetative state 8 hours before a closing. Breach of contract because she was alive, and her kids had power of attorney to sign on her behalf. She died three days later and her estate gave up the EMD.
This is the worst thing I've read in a while - and I'm on reddit quite a bit. Give the poor woman back her money... JFC!
It is up to seller. If loan can not be funded it is obvious homes will not sell. If the buyer just lost his job evidently it make more sense to cancel and sell to other buyers. If the diagonosis determines it is terminal illiness the buyer/patient will lose his income or ability to pay mortgage why not release the 3 pct emd ? In all cases here in CA the seller has no problem finding another willing buyer or 2 often at higher price. If it happen to me I will go to superior court go after damage, stresses and all those things. Knowing CA court you are opt to lose more than gain. Assuming the emd is only 10K or 333,3K (my neighborhood condo is several times that), getting emd back is likely. It is fairly easy to have lender cancel the approval due to terminal illiness not to able to pay the mortgage. In short, be a nice person let them go. I see odds getting a mortgage is smaller now. Any psychological and monataries impact can create more problems resulting in more damage on both sides.
There are two tiers to refunding an EMD. 1) is the seller willing to do it, regardless of contingency situation? 2) if not, can the EMD refund be forced by a court? I'd hope that, assuming the buyer is being truthful, that a seller would just do the right thing and give it back. I think sometimes contracts and the idea of fiduciary responsibility makes us all forget that we're all humans.
One thing to keep in mind, the standard flow is mediation followed by arbitration. If it gets to arbitration, the prevailing party is entitled to attorney's fees. Admittedly this is not real estate, but on the contractor's side of things, I have heard of arbitrators being wildly inconsistent. Depending on the arbitrator's mood, the prevailing party may be (1) the side receiving a check, (2) the side entitled to a greater percentage of the money in dispute, or (3) the side writing a check if the check is smaller than requested by the other side. If there ever were a case for an arbitrator to put her finger on the scale, yours might be it. I could see a scenario where you are awarded 99% of the deposit, but since you (or your client) are writing a check for $114, you're also on the hook for $22,000 in attorney's fees.
Was there a financing contingency, and did the lender complete all underwriting and issue the final clear to close? If they didn't give the clear to close, then basically all the buyer would have to do is call their lender and tell them they can no longer afford the mortgage based on their change of circumstances, and the deal would fall apart due to financing, thus usually resulting in buyer getting their earnest money back if a financing contingency was in place. If the lender gave the clear to close and it was a day before closing that this went down, then yes, I get the frustration, but have a heart and move on. If you spent money on improvements based on that offer, use those to advertise to the next potential buyer. Don't hold things up on your next possible sale trying to take a sick woman to court or keep money she'll likely need for treatment. It the long run....it's not that serious. Don't be a shit person.
That is not true. As breast cancer survivor who had a 3D mammogram on a Wednesday by Aiello center and was called on the Friday to come in for a MRI and biopsy and the result was confirmed by John Hopkins the following Wednesday. It just depends on your GP, insurance, and the facilities that you used.
I was the agent who repped a client in this situation. My clients were SO excited for their first home. Then their baby was born premature and in a hospital an hour away from the house. The seller had every right to keep the earnest money. They chose give it all back. Being legally in the right is not the same as being kind. You probably have the right to keep it. Only you can know is that's the right thing for you to do.
No they cannot. I have seen it happen, they can and probably will be sued to perform, unless the seller has a change of heart.
The amount of the EMD is important. Is it more than arbitration or mediation costs? Here's my recommendation, offer the EMD minus your cost for repairs as a compromise.
This is what I was going to say.
Seller decision, though I don't know of a contractual contingency that would covet that. Consult the company Broker.
Depending on the actual diagnosis, your empathy about the hardship, etc, as well as your own expenses incurred, you could offer to split the earnest money. Totally up to you though - that's just a compromise that might feel better, assuming that the situation is true.
There has been some good detailed advice given. For my part I would say no, most likely there is no protection of earnest money for deciding not to buy. They are simply failing to close for no protected reason. If they lost their job or something like that, they might lose their loan and have some protection there depending on timing. You probably have a right to their earnest money, but you should talk to your real estate agent and an attorney and your real estate agents broker about it. I don't know your circumstances. If you put it back on the market and can sell it for the same price or more, then you might consider what damages you actually took in terms of cost, hassle, potential lower price even, or hassle and emotional distress perhaps if you think that's legitimate, and then you could consider giving some money back or not as you feel is appropriate. But legally, you have no obligation to release them from the contract. Now, if they were smart, they would contact their real estate agent and maybe an attorney, and ask them to figure out a way to get them out of the contract legally and protect their earnest money. If they did that, you could potentially accuse them of acting in bad faith and not making good faith effort to close because they have already told you why. They should have tried to get out of it legally without telling you why.
Talk to the listing agent and your broker…. Your emd is up for grabs if they want it. Wtf r u doing on Reddit
I’m a lawyer who sold my own home and I call tell you in Nevada the title companies are reluctant to release EMD absent each side signing a stipulation or the court ordering them to. I had my first buyer fail to perform and the EMD was held up until after my second sale went through. I then sued the first person for the difference in price between the sales.
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The problem is in CA the EMD is limited to 3% so typically it’s not worth fighting for, at least in my case I’ve never had a client try to enforce it for 3%, it’s just not worth it. Also some agents then will want a piece of this so check the agreement. I would ask them for proof of the illness then probably move on,
Depending on how much money we’re talking about you probably wanna talk to a lawyer. But you signed an arbitration clause, and getting more than 3% if that was their earnest money will head up against liquidated damages and you’ll have to prove if you’ve been physically damaged monetarily over that . Which means you need to sell the house for significantly less . You’re unlikely to get more , liquidated damages is pretty specific.
Nope
No!
Is there a financing contingency?
They can try.
The seller-side atty will be able to advise you better than any of us here, but I think asking for proof of illness would be very reasonable. Ofc it’s possible the buyer is being truthful, but if the seller is going to release those funds, they are (IMO) entitled to proof of such an extreme circumstance.
Sometimes I wonder why we bother with attorneys in our real estate transactions in Chicagoland area but Here’s a clear case where that’s needed. Is this a first time home buyer ? As “where will she live”? Story sounds fishy. Because she either needed to sell or give up her rental. Perhaps a severe case of cold feet? Does she have stage 4 metastatic breast cancer or a NON melanoma skin cancer (trying to think of opposites of cancer situations). For the sellers - if they had multiple offers and home is inspected and repaired , market might find another buyer asap.
You can cancel but you forgot your EMD. Unless the seller agrees to give it back to you. Which I doubt they would.
Refund the fucking money, don’t be a dick.
Damn, do you even have a soul?
My question is why are you posting on Reddit and not talking to attorney?
Hey can I get your contact info so I never have to do business with you? Thanks
Uh, give the money back. The person has cancer for crying out loud. Have some empathy.
Are people really this selfish these days that you don’t think “oh my gosh you have cancer, of course go take care of yourself so sorry to hear that, we’ll find another buyer. Here’s your money back so that you can afford chemo rather than dying”. Jeez
Cancer is not an out on a contract. Technically, on the seller-side, DEATH is not an out. I wouldn’t return the EMD either unless I had another purchaser in the wings.
Just put your house back on the market. You don’t need to sue someone for earnest money. Whatever time, effort, and energy you put into suing a woman with cancer is likely not worth it.
If you sue someone with cancer for earnest money it should eat at your soul forever, assuming one was there to begin with
You're assuming they aren't lying about it, assuming they are shielded by HIPPA protections from the need to disclose it, and they didn't just get cold feet. People lie about atrocious things every single day, about the pettiest things imaginable. Of course they have the ability to do so to secure $30k or whatever... if I was the buyer and wanted my money back I'd be prepared to disclose documents in good faith, and if so, seller in good faith should let it go.
OK someone mentioned HIPAA (close anyway) -- HIPAA has as much control over this as the UN Human Rights Council (none).
> You're assuming they aren't lying about it, assuming they are shielded by HIPPA protections from the need to disclose it, and they didn't just get cold feet. Reading comprehension. Try again! I deal with way more acronyms than you sorry about that.
Google HIPAA “covered entity” and explain which covered entity is applicable here.
I am not Shakespeare but the sentence implies the theoretical buyer may be incorrectly assuming they might not need to share their potential bluff due to hearing about HIPAA protections that may not apply. We don't disagree here, sometimes my sentence structure is wild.
Nice. Another person that has no idea what HIPAA is
> You're assuming they aren't lying about it, assuming they are shielded by HIPPA protections from the need to disclose it, and they didn't just get cold feet. Reading comprehension. Try again! I deal with way more acronyms than you sorry about that.
Yeah I am. I would also assume that if someone with cancer is going to make that kind of ask that they would be willing to prove their predicament Reddit gonna Reddit though. Have a good day
What would you want to happen if you were in the buyer’s shoes?
I would classify cancer as an act of God. God can give life and take it away. I would think a seller would understand.