Legal Question in Real Estate Law in California
Exercised Contingency as Buyer. Can't get deposit returned.
a 30 day escrow, contract purchase date of 12/3/02, with a stated contingency of 6.5% FHA financing.
I wasn't able to get it but did qualify for an ungodly high rate. The deal presented to me by the mort broker, the only one I engaged, said he could do the deal at 9.2, or something.
A week before closing, it looked like to me (a first time buyer) that the escrow date wouldn't be met. I called the real estate agent (I had a co-agency relationship), endured her screaming at me, then agreed to deposit an additional 1500 dollars into escrow to show that I'm serious about purchasing. That small amount brought the escrow to 4500 towards a 215,000 condo in Los Angeles County.
Even with the additional deposit at a time when I knew 6.5 and FHA wouldn't be attainable, I believe that I exercised correctly. #1. I can not afford payments on the mortgage, not in any way, at the rate I was finally given, #2. At the time of my second (harassed and forced) deposit, I was under the impression which I might have in writing, that the rate would be 7.5 fixed, or near there.
The issue: the seller won't agree to return my money. he'll give me half. damn bastard.
The word count allowed limited my post.
3 Answers from Attorneys
Re: Exercised Contingency as Buyer. Can't get deposit returned.
If the written documents provided a contingency of you getting a certain rate mortgage and you did what you could (you might want to work with another broker to show good faith) the contingency failed and, assuming the documents do not indicate otherwise, you would get your deposit back. You may have to sue in small claims court. I would suggest naming the Escrow agent as well as the adverse. Additionally, the broker may have violated various rules.
JOEL SELIK
ATTORNEY/RE BROKER
800-894-2889
www.seliklaw.com
Re: Exercised Contingency as Buyer. Can't get deposit returned.
Does the contract include a contingency period for financing? If it does and you did not cancel the contract in writing on or before that date the seller may be able to keep your deposit. I would need more details about the extra deposit. If the additional deposit was to extend the contingency period (and that agreement was in writing) you may be in good shape.
Did your contract include a "mediation clause"? Is so, you will want to demand mediation before filing suit. This will allow you to collect attorneys fees from the seller IF you get a judgment against him/her for not returning your deposit.
I agree with the other reply that you should explore a claim against your agent/broker. He/she had a fiduciary duty to you and may have breached that duty in various ways.
I have solid experience in this area of the law and would be happy to help you if you need more assistance. Please feel free to contact me.
Re: Exercised Contingency as Buyer. Can't get deposit returned.
Both of the previous answers are correct and need to be read and understood as covering two aspects of the same problem. I think in sum the issues at trial would be whether you complied with all deadlines and whether the extent of your loan-broker contacts was sufficient to meet the good-faith effort criterion.
There is also a lingering background question as to why the quotes you got were so high in today's market. This raises a possible issue of whether you were overstating your qualifications going in to the deal, and then when lenders investigated your proposed loan in more detail they found out that you were a poor risk.
Don't take this as an accusation, just something to consider in looking at what went wrong here and what your problems might be in winning in court.
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