I'm the second agent on a REO listing. I have worked with this "seller" for many years. The agent before me went into contract with a buyer, but failed to close it. She also did not recover the earnest money. I was giving the listing and it went into contract within about a week. What i did not know was that it was the same buyer and the same agent as before. I did get the earnest money and its sitting in my brokers account. well they did not close this time either. The seller wants the earnest money. I have given all the paperwork to my broker showing the request in writing from seller and the board form requesting it. My broker is trying to get the other broker to get the buyer to sign off but it is taking a long time. Seller is asking. I dont want to loose a long time client over this. any comments would be helpful.

What does you state law say regarding the release of earnest money when buyer defaults?

Just explain to the AM that you have submitted the form to get the earnest money release to him but that the buyer broker is dragging their feet. Talk to your broker and let him know that the AM wants the earnest money asap! Your broker needs to give the buyers broker a deadline.

You are probably ON THE CLOCK... once you have reason to believe a conflict exist over earnest money deposits, most states Require you to start a notification process with the controlling state agency.

In my state I must immediately notify the State Real Estate Commission of the conflict on dispersement and request their instructions... which almost always says refer it to local courts and in most cases the loosing party will have to pay the legal cost of both parties and loose the deposit.

Florida has recently made a change where if a real estate company made the deposit to a Title Closing Company or attorney... it would be that entity that would have to get the parties to agree or refer it to the courts, taking the brokerage out of the loop. This new process is getting a lot of use and many brokerages no longer have escrow accounts which is the leading cause of Real Estate Commission fines due to book keeping errors and frequent loss of real estate license.

This IS Something you need to address with your broker immediately... tonight even...

Sreel- I don't know who your seller is, but I've had this quite a few times with REO sellers. I've never had to go to court over one, the seller has always caved and given the EM back to the buyer. I hope your situation works out well.

Why should the seller have to cave? The earnest money belongs to the seller as the buyer defaulted and failed to close. In case you have forgotten that is the purpose of earnest money and if you are representing the seller it is your duty to look after their interest which is getting them the earnest money.

The real question is who is entitled to the earnest money the buyer or the seller.What does the contract that both parties agreed to SAY.Was there a finance contigency that if not met by the buyer the buyer would be due the earnest money because they didn't qualify for the loan.

Usually the bank addendums are very clear on earnest money that the buyer signs and most of the time the bank keeps it.

Forgive me If I am wrong on this one I am exhausted but I seem to remember that if the buyer wants to push the issue to court over the earnest money the bank will not be able to sell the property in question until the issue is resolved so they might want to drop it all together and move on to the next buyer so they can liquidate the assett.

Example the earnest money might be 1,000 but the time it would take to recover it in court would cost the bank more than it's worth to pursue.

I did not say they should, I said they DID. It was their choice, with no input whatsoever from me.