Luckily not one of my agents transactions. He called me because one of his buddies put an offer on a property.

Instead of putting upon acceptance they went ahead and sent a 30,000 EM check with the offer.The buyers decided to cancel their offer and it was never accepted. Meanwhile the listing broker deposited the EM check and then has died.

The listing broker was the sole member owner of their company. The buyers had a buyers agent but they are clueless as to how to get earnest money back. I told my agent not to get involved even though they are his friends and the buyers should seek a real estate litigation attorney for help and options.

What have you seen happen in these situations??

The Real Estate Commission should be able to appoint another Temporary Principal Broker, maybe even from another Firm, to serve as a temporary Broker to settle Accounts for the soon to be defunct Brokerage.

We recently had a Unmarried Coldwell Broker Principal Broker die and no one in her Agency held a Broker's License (though there were Sales People). A Broker Friend of hers at Century 21 was appointed by the Real Estate Commission to serve as the Temporary Principal Broker until one of the Sales People got their Broker's License.

I think Vermont also has a Hardship Appointment where an Unlicensed Spouse might serve as a Temporary Broker to carefully settle Accounts like what you describe, and close out the Transactions that are in motion in an almost "Seamless" manner. But, surprisingly, many Spouses wouldn't have a clue. They probably have to utilize an Attorney or an Accountant to bring things to a soft landing.

Both of these are for no more than one year duration, without action by the Commission.

PS: We now don't have to deposit the EMD into Escrow until all Parties have executed the Agreement. Then the 5 Day meter starts running. It used to start the moment we received the Check.

Jeeze, why did he deposit the EM before he had an executed contract?

I don't know as it wasn't mine or one of my agents transactions. It was a friend of one of my agents and so my agent called me to help out his friend. That is when I told him he should not get involved.

In GA we have an earnest money paragraph that say _____________ is holding earnest money. In there I always put for example (ABC realty upon acceptance) and then send a photocopy of the earnest money check along with the offer. Then upon an executed contract I will get the check from the buyer and deposit into my escrow account. I usually fight for the buyer to hold the funds especially on REO as it's a pain to get it back. I only let the seller (broker) hold in escrow if there is no other way.

Sounds like this other company had a really crappy buyers agent.I can see the buyers going after them now. They don't even know what is in the contract.

I tell you it is REALLY scary out there !

Buyers agent error. Like you said Super they should have held it and sent just a copy.
yes, scary indeed.

I get questions from buyers agents all the time, many of them brokers submitting offers on my properties, that don't know how to handle earnest money. Many of their brokers maintain a bank trust account but don't use it for it's intended use for some reason.

BTW is Georgia an attorney state or do they use neutral escrows?

They say you can't take it with you, but it appears the broker found a loophole.

I'm going to do same thing, when it comes time to check out. All my kids have been put on notice. I told them, "Based on my past track record, I figure I'm going to have to pay for a whole bunch of air conditioning to where I'm heading". Of course, this will be my money, not somebody's money left in a trust account. The sad truth of the matter, none of them argued me...lol

In GA we use closing attorneys for closings. We are one of the few states that do.Documents are signed at closing and keys are exchanged. Usually you get all checks at closing except sometimes on REO I have had to wait 4 days to get my check because the bank wanted to review the HUD-1 before final sign off.

In GA usually the listing broker holds the money in a seperate escrow account but title companies and attorneys can also hold the earnest money as well. Sometimes the buyers broker will hold the EM also.

Sounds like Ga and NC are close to the same.

I would go to the appointed BIC and demand the money back - and at the same time demand the money back from the BA.

At the same time I would detail everything in an email to the Ga Real Estate Commission - and seek their help, which will probably end up with an audit anyway. But light the fire under the officials ASAP.

It looks like the temp BIC has stepped in the middle of some fresh and deep dodo.

I wonder if the bank records really show the deposit days before the broker checked out, or perhaps when it was known the time was near - or even shortly afterwards??

Interesting - glad I'm not involved, more brokers are busted for mishandling escrow accounts then anything else.