I recently had a home under contract in Florida and it was contingent on financing. We had problems obtaining an appraisal high enough for the property but we did obtain one. (It is a unique property it was hard to find comps) After we got the appraisal we gave everything we needed to the mortgage broker he sent it in. We finally got the info. from the mortgage broker we were all set to settle the day settlement was supposed to happen the broker said the paperwork wasn't back it would settle two days later. Two days later came and we didn't settle. We asked for an extension because we were out of contract. They gave a verbal extension they wouldn't put it in writing. Monday came and the mortgage broker called and said the bank denied the financing due to the appraisal. They appraised the house 40,000 below the asking price. Now the seller will not give me my escrow back because they had a renter and they had to get him out before the contract was up. They are trying to keep 4500 out of 5000. Can they do this.

Hard to give a valid answer without reviewing your contract.

Sounds like it's time to get your attorney involved.

Here's a recent example of what happened to someone in Massachusetts and they did ultimately close.

Sounds like your lender is the real culprit here by not getting your loan approved or denied within the contract time frame.

http://www.inman.com/hstory.aspx?ID=49778

Massachusetts home seller gets $150,000 damages in full-priced sale

"Beware of real estate contracts that let sellers recover liquidated damages when the buyer doesn't close by a certain date -- they can be enforceable. In Perroncello v. Donahue, a Massachusetts appellate court allowed the seller to keep a $150,000 deposit as damages for the buyer's failure to close by the date set in the contract – even though the home eventually closed for the full asking price of $2.25 million."

Read your contract: our contracts say something along the lines of "if you default for financing, the seller will refund the earnest money" If a similar statement is in your contract, I would think the seller would be in breach.

If that's the case, then you need to consider how much it will cost to settle this in court, or through mediation.

The only other solution I've seen for this issue is the escrow holder suing both you and the seller, because he cannot get rid of the money without a release from both of you.

I would advise you to speak to an attorney.

Thank You both for the info. Monday I will be contacting my atty. and filing a lien on the home. There is a contigency on financing if the property appraises below value then we can cancel. The appraisal I obtained appraised right where I needed it, but when it got to appraisal review in the bank they tore the appraisal apart. They said the value wasn't there. The other agent keeps telling me to refer to line 235 in the contract but I keep telling him to refer to the financing clause. It's a big mess. My agent and his broker have never encountered anything like this. I will keep you posted. Hopefully this will all be resolved shortly. If anyone else has any info. that might help I would greatly appreciate it.

seeclearly
I am in Florida. Please look at the very bottom of your contract. There you will see either FAR and or Far-Bar with a number let me know witch one you used. Also who is holding the escrow? Is it the real estate broker, the attorney, or Title Company? If held by the real estate broker then he can not just give it to the seller. Usually the title company will not just give it to the seller without buyer and seller signature. If held by an attorney then they can make that call however usually they won’t due to the liability.

Nevertheless please bring in your contract to your attorney.


Hugh question, why would they not put it in writing? Your title company and attorney who is closing most likely would not close without one in place. Here in Florida verbal as it relates to real estate I hate to say it means Nada. So technically right then you was out of contract

Ask your attorney.

My contract is at the atty. office. I gave it to him on Monday, he is mailing out a letter of demand. We used a regular FAR residential contract and the escrow is at the settlement co. They won't release it until the papers are signed by both parties. I was under the understanding if you couldn't obtain the financing the deposit would be returned. Is this incorrect?

My contract is at the atty. office. I gave it to him on Monday, he is mailing out a letter of demand. We used a regular FAR residential contract and the escrow is at the settlement co. They won't release it until the papers are signed by both parties. I was under the understanding if you couldn't obtain the financing the deposit would be returned. Is this incorrect? the realtor said his clients were out of town so he couldn't get an extension.

To answer your question to be honest boils down to who has the better attorney. I have been on both sides and can see both sides.
One thing I am confused about is The other agent keeps telling me to refer to line 235 in the contract Why??? That has to do with if any provision or line of the contract is deemed voided, changed, or illegal then the rest of the contract stays in place. In other words you can not kill the contract because of one issue in it.

Also please read lines 38-41 and discuss that section with your attorney. There it states pretty simple if your appraisal is below your contract price and you and the seller can not agree on a new purchase price or buyer elects not to proceed then contract is terminated and buyers deposits is refunded.

Sorry not to add fuel to the fire but I do not buy that one. Several things first and foremost why was the seller out of town the day of closing. Then the seller also contributed to the property not closing. And with email and fax why could the agent not get in touch with the seller especially so close to closing. I would never let my sellers get out of touch the week of closing. Plus you have two agents and a title company not having both parties available to sign papers the day of closing. So to be honest even if you could get financing seller was not available to close. Therefore you were not closing anyway unless the seller went to the title company and signed everything before they left. That is very important in this issue as well. For they are going to say it’s your fault for not closing as per the closing date. Make sure you point out that if seller did not sign ahead of time then seller was not able to close.