Refund of deposit rules and regulations on property i was selling and the buyer could not get a mortgage .?

Question

I took a deposit of 5 per cent on a property i was selling and the person i was selling to could not for some reason obtain a loan to buy and i waited for almost 13 months and eventually he withdrew from the deal and i promised as i did not want to take any money which was not due to me that i will refund his deposit as soon as i have sold the same property as i do not have any other source at the moment but what he did was to threaten me thru some debt collection thugs who have written to me(letter as no tel.no. or address) and given me a ultimatum to pay till the 7th.or face the consequences which will be bad.My question is what should i do as i and my family are all living in fear at the moment ?

Answer 1

Either you refund the deposit now or not at all.

The deposit was good faith money from him. In the offer to buy, it should have stated if it was refundable or not.

If you are threated with violence, call the police.

If you are threated with legal action, call an attorney.

Answer 2

Your sales contract should clearly state the terms of the sale and deposit money. Most contracts have what is known as financing contigencies meaning that the buyer may withdraw from the contratct and receive their deposit back in full if they cannot obtiain the loan or loan terms specified in the contract. Also most contracts have an expiration date by which the closing must occur, usually within 30 to 90 days . If you waited 13 months for the buyer to close I assume you either did not have a contract or extended it beyond a reasonable time. If the contract had expired, you were under no obligation to wait and turn away other buyers. Either way the terms must be in writing, and if there is a financing contingency you may likely have to refund the buyer his money. Definitely consult a lawyer because the fear tactics they are using may be illegal. But be prepared to if you have to refund them.

Answer 3

When you wrote the contract to sell the property, it should have stipulated in the contract what the deposit refund terms are and also when the closing date should be. If the contract or any other paper that you and the buyer signed does not state the deposit refund terms then it was the intent of the buyer to forfeit the money if he cannot purchase whatever the reason and that as a Seller you have the right to the money and if the buyer persist then report him to the Police for harrasement. He can take you to small claims court to recover the amount. The contract has to be writing to be binding.

Answer 4

You said that the money would be refunded at the sale. The sale didn't take place, so no refund. If you had this under contract every court in the land would support you. Now about those men. People need a license to be a legal debt collector. So you could:
1). Call the police and tell them the story, show them the letter, and get a restraining order. Since you are selling and moving anyway.

2). Give the money back, and then sue him to get money back with interest. You have all the documents favoring you.

3). Just give the money back.

Answer 5

The deposit should have been held at a title company in escrow in a non interest bearing account. Prior to him giving you the deposit it should have been agreed wither or not that deposit would be refundable or non refundable based on different conditions. Typically, if a buyer cannot obtain financing he is owed his money back. If nothing was agreed upon in writing that you need to contact an attorney. You tied up the property for 13 months?! Yikes!

Answer 6

This would depend greatly on what type of purchase agreement was made. I am a Realtor here in Las Vegas and deal with such issues all the time. Usually the purchase agreement has a contingency in it that specifies that the deal is based upon the buyer receiving financing and usually spells out what type of loan i.e. fixed, ARM, rate, etc. they are expecting to receive. If they cannot meet those requirements, the earnest money deposit is to be returned to the buyer. A good way to keep that from happening in the future is to counter the purchase agreement to state that the buyer's purchase is contingent on the buyer getting a loan at the best rate available (therefore not limiting them to one type of loan that may not be available to them) and setting a deadline for the loan process to take place. Hope this clears things up. If you like you can contact me and we can discuss it in more detail. Even better would be sending me a copy of the contract (with the vital infor, Names, addresses and such) for me to review.

Answer 7

Most Sales Agreements specify how the buyer will complete the purchase whether in cash or through financing. If the buyer is unable to obtain a loan you are entitled to proof and, once obtained, you are required to refund the deposit.

If your home was listed with a Realtor they should have followed this through for you and, in all probability, you would have ended up in arbitration and, due to the length of time from inception to sale fail, you would have been awarded at least some of the deposit.

If you were not represented in the sale you now understand one of the many valuable services a Realtor provides.

Answer 8

All Sales Contract have terms and conditions that help protect sellers and buyers. Without seeing your contract terms, it's hard to tell. Under normal (as if I wrote the contract) circumstances, buyers would be able to void the contract if their loan request was denied by the lender (and they can do nothing about). If that is the case, it's your decision to pursuit any law suit, but most likely, buyers will come out clean because it's not their fault. In that case, you will have to refund their deposit. There are other contingencies that might allow buyers to void the contract without any penalty as well. Get legal advice in this case is the best.

Answer 9

What did the original offer say? There is almost always a clause providing for refund of the deposit if the prospective buyer can't get financing. There is also normally a time limit for doing so - 13 months is just plain ridiculous, unless you kept agreeing to extensions.

If they are entitled to their money back, then they're entitled to it as soon as the offer has expired, which sounds like it would mean NOW.

Answer 10

First of all 13 months is a long time to obtain the loan.It depends on the transaction also.You need to check your contract if the loan contingency box was checked .Ask your agent. its better to have agents involved as they will make sure things are done in a timely manner .And if it takes longer than the time on the contract ,they will make sure the buyer removes the loan contingencies so they are not wasting the sellers time.If you dont have an agent contact one and show them the contract and they will tell you what your options are.If u cant find and agent I might be able to help you.Good luck.

Answer 11

You question needs to be worded better. I can't really understand what you're asking but basically all deposits and agreements regarding the deposit is in your contract that you signed. You MUST adhere to the contract on both sides or either party can sue. If he waited 13 months chance are with most contract he would not get his money back.

Real Estate Zen