How can seller get buyer's deposit when buyer fails to close on sale of house?
In this case, the buyer clearly defaulted under the contract and the seller was clearly entitled to the buyer's $1,000 good faith deposit. However, the title company closing agent will not release the deposit to the seller without the buyer's written permission.
Renee: We do have a residential property that we're selling, and our buyers failed to close. Our agent communicated with her agent several times, the only person that would communicate with us is their lender and she simply just did not meet the deadline in the contract, so she did not act in good faith. The contract expired, the property is still for sale, and we believe we're entitled to the $1000 of escrow that she had put up. Our agent is telling us that her agent has to agree and she has to agree, and during the transaction they're unresponsive
Attorney Tom Olsen: Renee that thousand dollars is being held by a neutral party probably the title company, is that right?
Attorney Tom Olsen: Renee the bottom line is that the title company is not going to release that $1,000 to you without the written consent of your buyer and the buyer's agent. Renee the best thing you can do is get the buyer to agree that that money belongs to you, but realistically you may have to say, “Okay look we'll split it for you, you can take $500 we'll take $500.” To get them-- put a carrot out in front of their nose for them to sign that consent for you.
Renee the lesson to be learned here is that $1,000 may not be enough of a deposit next time you go to sell your house, you may require a bigger deposit. Maybe rather than a neutral third party hold that deposit maybe you the seller should hold that deposit. Renee, does that answer your question for you?
Renee: It does we didn't realize we could hold the deposit, that’s good news.
Attorney Tom Olsen: You certainly can and when my clients are sellers I do recommend that they hold a deposit because you've experienced the problem that everybody else is experienced. That is Renee you are absolutely right, that black and white you're right, and yet you can't get your $1,000 because the title company is not going to release it to you.
Renee: If they never sign anything that the title company just keep it indefinitely?
Attorney Tom Olsen: Eventually they're going to go to court, and they're going to put it in the court registry, and they're going to back out their attorney's fees of a $500, now you got $500 that's going to be available to you. The other option for you Renee, is to go to small claims court and get a judge to agree that that $1,000 belongs to you. Yes you can present that order to the title company, and they'll give you that $1,000. Renee, you'll probably spend about $250 in court costs to get that done but will be a probably a pretty easy case for you to win.