My GOOD FAITH DEPOSIT was cashed already; when agent said they wouldnt untill the sale was final!?

Question

Upon making an offer on this real estate property, we were told that our good faith deposit check would not be cashed untill the deal went through and that amount would be deducted off the asking price OR returned to us if the property failed inspection. So I wrote out a check for $500.00 dollars and handed it over to my buyers agent who in turn forward it over the the sellers agent for escrow holding. The property failed inspection so I let my buyers agent know that I did not want to pursue the property. She agreed, and I asked about the deposit check (if we can get it back now) and she said she will talk to the sellers agent. I just checked my bank account and the check was cashed. She told me that they wouldn't cash it, why was it cashed? Did she lie to me?? It's it a normal thing to cash these types of checks so quickly even though she said it wouldn't be cashed??? I am so angry right now I don't know what to do. It's midnight, and I feel like throwing stuff around the house.

ALSO: Note these dates.. I placed the offer on the 29th of last month, I wrote/gave the check on the 30th, inspection was the 1st, I told my agent it was a "no-go" on the house the 2nd, and the check was cashed the very same day (the 2nd). I just found out a few minutes ago that it was completly processed the 3rd.

Rick B = That money had to go into an escrow account. (Yeah, I know that already.. but why did she actually cash it when she said they would not.)

Mildred S - wow, wow woooooow!! It should have went into an escrow interest bearing account!?!? oh yeah? So shes screwing me over even more!! -she told me it would not be interest baring, oh this is getting even better by the minute.

es - that was a really good answer!! I feel like your looking out for me.. thanks!

Lainie L - maybe she said the SELLERS can't have the money until the deal goes through? Ah I don't think so, down payment is to go directly towards closing of the house.

Answer 1

acermill is correct about the interest bearing account. I don't know from what state Mildred S is coming from, but there is no interest due back to the borrower in Texas on the deposit of earnest money or, as you call it, good faith deposit.

Unfortunately, your Agent misinformed you or perhaps there may have been a misunderstanding. Your initial deposit of $500 must be deposited with a disinterested party. For most states, that would be a title company.

I don't know how your contract reads nor what state you're from, but here in Texas we have what is called an Option Period that takes place the first few days (usually 7-10 days or whatever is negotiated) on resale transactions that will in fact protect the Buyer's earnest money. IF the Buyer opts out during that period, the Buyer will automatically receive back their deposit from the title company.

If your state does not have that protection period giving the Buyer the unrestricted right to terminate, you will need to begin the termination process with papers. In Texas, it is the Termination of Contract and Release of Earnest Money. The Release of Earnest Money has to be signed by all principals involved authorizing the title company to refund the deposit.

Check with your state's real estate commission for proper procedure on your situation. Have your Agent comply with that procedure. If not done to your satisfaction, refer to your agent's broker. It is the Broker's responsibility to mediate and resolve any problems.

Answer 2

By law, the agent can not hold your check once the seller and buyer both sign the contract. If you already had an inspection, you must have had a contract signed between you. The good faith deposit is not cashed under one condition: if the seller did not accept your offer and sign the contract.
An escrow account is specifically designed to hold money before the deal closes. The agent did the right thing. You should be sure to ask the agent to write a termination within the time period for inspections. Your realtor should be asking you to sign release papers, and the seller must sign them too. If you feel your agent hasn't done a good job explaining the process to you, and is not protecting you properly, you should call the Broker ( the agent's boss) and let him/her know immediately. Real Estate Brokers are open 7 days a week. Don't wait until Monday to talk to the Broker. State laws concerning real estate transaction vary. However, all of them have strict time frames for the deposit of funds. Good luck!

Answer 3

I have never heard that a check would not be cashed as it is considered the escrow. It should be held in a seperate account that is interest bearing for you. The real estate agent should never hold your money / mix it with personal money / accounts. The company needs a business account and interest is due to you. They can't possibly pay you interest if the check isn't cashed ... or really hold a check for too long. They could lose license for this. Maybe the agent didn't understand and their broker (supervisor) , explained it to them ? They could have turned check over to clerical staff who deposited it according to agency procedure. The best thing to do is to ask the agent .

Why would you be angry ? The check is traditionally considered a promise of payment. If it is written the money should be in account the moment it is written .

Please do try not to stress ... Monday will come and you can call the agency / find out the situation get your money back. Actually your real estate office might even be open tomorrow morning / Saturday.

Good Luck.

Answer 4

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RE:
My GOOD FAITH DEPOSIT was cashed already; when agent said they wouldnt untill the sale was final!?
Upon making an offer on this real estate property, we were told that our good faith deposit check would not be cashed untill the deal went through and that amount would be deducted off the asking price OR returned to us if the property failed inspection. So I wrote out a check for $500.00 dollars...

Answer 5

The money has to go in escrow. Without actually hearing what your agent said I can't take a side here. But, maybe she said the SELLERS can't have the money until the deal goes through. The money is held in an escrow account until then. You can't just give them a check and have them not cash it. How do they know the check is good? My guess is you'll get the money back due to the outcome of the home inspection. The sellers cannot accept another contract on their home until the earnest money situation is resolved anyway so hold firm.

Answer 6

That money had to go into an escrow account. Yes, that is normal. An agent won't keep around a bunch of uncashed checks and hope they don't lose them, that they are good, etc.

The proper fiduciary thing to do is for her to cash it and put it in escrow.

Note that she CAN'T comingle that money. If she put it in her own account, she could get in BIG trouble with the real estate commission.

**** I don't think she had any right to tell you they would not cash it. YOUR agent should know that all these are cashed and she should have told you that.

Answer 7

Perhaps you misunderstood your agent. I know of no area in which earnest money checks are held and not cashed until the closing occurs. The fiduciary responsibility of the agents involved consist of holding earnest MONEY in an escrow account either until closing, or until the deal falls 'dead', A check isn't money. It's a piece of paper. In my state, an agent is required under real estate law to have that check deposited within 48 hours of receipt.

Relative to interest on the money, laws vary from state to state. In my state, there is no interest involved. The money is held in a separate account until time for disbursement.

Answer 8

Why are all the answers so dull and short these days?

Answer 9

I think they saw you were a waste of time!