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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Real Estate Law
Satisfied Customers: 18799
Experience:  B.A.; M.B.A.; J.D.
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I am trying to get my $20,000 deposit back on a $268,000

Customer Question

I am trying to get my $20,000 deposit back on a $268,000 home in upstate NY. In the contract it stipulated that I had to provide "proof of funds" within 7 days--I was not able to do that because the sale of my other house here in NJ fell through. They want to only give me $5, 000 back. Also, it turns out that the contract was initiated by the realtor I hired to sell my upstate house--who is friends with the seller's realtor. Is this legal?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Phillips Esq. replied 1 year ago.

I am sorry, could you clarify?

What did you mean by the contract was initiated by the realtor that you hired to sell your upstate house?

Is this realtor also the agent of the seller on the house that you were trying to purchase?

Did you give a notice within the deadline provided in your contract that you could not provide "proof of funds?"

Customer: replied 1 year ago.
The seller, whom I contacted through a friend and not through a realtor, and I, shook hands on $260, 000, and he said he would send me a contract. I waited a week, and my realtor (only hired to sell my upstate house) told me that he was still showing the house. I got very concerned, and that is when my realtor, who was friends with the seller's realtor) initiated the contract. The seller was irate that we had another agent involved and raised the price, and doubled the deposit. I should have walked away then. No, I did not know that the person purchasing my house in NJ couldn't get a mortgage until after the 7 day deadline. Doesn't that mean that the contract was voided?
Expert:  Phillips Esq. replied 1 year ago.

Thank you.

So to be clear, you did not notify the Seller of no proof of funds within the deadline given to give notice and walk away and get your earnest money deposit back?

Customer: replied 1 year ago.
I did not notify them of that within 7 days because I did not find out till the end of May that the purchaser of my Teaneck house couldn't get a mortgage. I showed the what I had on hand, and they wanted more proof. Wouldn't it be up to them, if they put the proof of funds time stipulation in there, to release me if I obviously didn't have the funds? Was the contract even valid since I went beyond the 7 days without proof? I kept trying to get the money together till the beginning of June.
Expert:  Phillips Esq. replied 1 year ago.

Did you sign the contract?

Customer: replied 1 year ago.
but unfortunately, the realtor sent it to me before he sent it to my lawyer. My lawyer, unfortunately, was not really protecting me in this matter. I feel I should have had some other mechanism outlining the return of the deposit. He told me after the fact that that was a huge amount for a deposit up there in the country---why didn't he tell me that? Also, my realtor, encouraged me to waive the right to have it inspected because it would speed things along. I really feel there was some collusion between him and the seller's realtor--but how could I prove that? I don't mean to muddy the waters with these other matters--just wanted to give you a sense of the situation. They all know each other, I'm the outsider from NJ.
Customer: replied 1 year ago.
Are you still there?
Expert:  Phillips Esq. replied 1 year ago.

Hello, I am sorry for the delay in getting back you. I had to go offline to run some errands.

I am now reviewing your post and preparing my response.

Thank you for your understanding,

Expert:  Phillips Esq. replied 1 year ago.

Yes, but unfortunately, the realtor sent it to me before he sent it to my lawyer.

Response 1: When you have retained an Attorney in the case, you should not sign any documents without getting the green light from your Attorney especially when the transaction has to do with real estate. The contract is an enforceable contract if you signed it.

My lawyer, unfortunately, was not really protecting me in this matter. I feel I should have had some other mechanism outlining the return of the deposit. He told me after the fact that that was a huge amount for a deposit up there in the country---why didn't he tell me that?

Response 2: I do not know, but he should have conveyed his concerns to you. However, if you signed the contract before he had a chance to review it, it would have been too late for you to rescind the contract based on his concerns.

Also, my realtor, encouraged me to waive the right to have it inspected because it would speed things along.

Response 3: It is NEVER a good idea to take advice from a realtor who is working on commission when you have an Attorney in the case. Waiving of home inspection is NEVER in the best interest of the Buyer. It is however in the best interest of the realtor because that would make it much easier for him or her to get his commission for the transaction. The realtor is self-dealing here and in violation of his fiduciary duty to act in your best interest. You may consider filing complaint against the realtor with the doard of real estate licensing. Click on the link below for the complaint process:

http://www.dos.ny.gov/licensing/complaint.html

I really feel there was some collusion between him and the seller's realtor--but how could I prove that? I don't mean to muddy the waters with these other matters--just wanted to give you a sense of the situation. They all know each other, I'm the outsider from NJ.

Response 4: See my previous response. Thank you for the information.

Your prior post

I did not notify them of that within 7 days because I did not find out till the end of May that the purchaser of my Teaneck house couldn't get a mortgage. I showed the what I had on hand, and they wanted more proof. Wouldn't it be up to them, if they put the proof of funds time stipulation in there, to release me if I obviously didn't have the funds?

Response 5: Regrettably, no. The burden is on you and your agents to notify the seller and either ask for extension or back out of the deal when the proof of funds was not forthcoming. The seller or his/her agent has no legal obligation to release you from the contract if you did not take action to ask for release.

Was the contract even valid since I went beyond the 7 days without proof?

Response 6: Yes, the contract is valid. It was up to you and your agents (realtor and Attorney) to request for an extension or back out of the deal on or before the 7-day deadline.

I kept trying to get the money together till the beginning of June.

Response 7: Your realtor and your Attorney should have requested for extension on your behalf to preserve the deal or send a notice to the seller/seller's agent backing out of the deal on or before the 7-day deadline.

If you are not able to receive your full refund from the Seller, you may look towards to the realtor and Attorney for relief.

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