How to get escrow deposit when house buyer defaults
When the escrow deposit is held by a title company or attorney, they will require a written release signed by both the buyer and the seller before they will release the escrow deposit.
Joanne: The home was put up to sale with a real estate agent. The contract was voided because the man that was buying the house couldn’t get financing. The man had put a large amount of money down $4,000. That money was supposed to be returned to my children and we don’t know where that money went. Well, we do know where it is. It’s at a title company. For some reason they won’t release it.
Attorney Tom Olsen: Joanne, once a title company has an escrow deposit, they’re not going to release it to the buyer or the seller without both the buyer and the seller's written consent. Joanne, you’re telling me that belongs to your sellers, the kids, I wouldn’t know that without looking at the contract. Joanne, a typical contract does have a financing or inspection contingency that would say that if he was unable to get financing, your buyer should get that $4,000 back. I wouldn’t know without looking at it.
Joanne: Okay. Well, I was told by the real estate agent, our real estate agent, that he voided the contract, he signed the papers for a voided contract, and at that point, knew he was going to be losing his $4,000.
Attorney Tom Olsen: Well, then Joanne, again that's not going to convince your title company. You have two choices. One is, your kids would go to small claims court and have a judge declare that that $4,000 belongs to them, the sellers of this piece of property or work out a compromise with your buyer. Maybe, you split that 4,000. 2,000 goes to him, 2,000 goes to your kids and you each go your own way.
Joanne: The real estate told us that the money was supposed to be released to them immediately as soon as the title company got it but-
Attorney Tom Olsen: No, title company's not going to let it go without the buyer’s written consent. Joanne, we're going to have to take a break.