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WiseOwl58
WiseOwl58, Lawyer
Category: Real Estate Law
Satisfied Customers: 3619
Experience:  Experienced real estate lawyer and real estate broker.
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I am selling a home in Michigan. I received 10 offers and accepted

Customer Question

I am selling a home in Michigan. I received 10 offers and accepted a cash offer from a buyer who agreed to an as-is/no inspection, no appraisal purchase and wanted to close as soon as possible. We both signed the purchase agreement and $1000 earnest money was put in escrow a day after the offer. My agent ordered the title work as a rush and a week after the signed agreement, called to schedule the closing. It was then the buyer said he wanted to back out due the "numbers not working out" and he now refuses to sign a mutual release. The contract expires in a week and the home is resisted already with new offers. My agent told me selling the home is no problem, but I need to take him to small claims to get the $1000 earnest money to which I am entitled. Is this the best way to proceed? Many thanks.
Submitted: 6 months ago.
Category: Real Estate Law
Expert:  WiseOwl58 replied 6 months ago.
The escrow company should release the earnest money to you, because of the expenses that you incurred. If they do not, you can take the guy to small claims court, but it might makes sense just to raise the sale price of your house to the next buyer by $1,000 and save yourself the trouble of having to go through the small claims process for $1,000. May not be worth your time since you are in such a strong position selling the property with ten offers, and all cash offers no less. Please rate 4 or 5 and close out the question. Good luck to you. I wish you all the best.
Customer: replied 6 months ago.
The escrow company says they won't release the funds unless the buyer signs the mutual release- are they legally obligated to release it? I am asking if I have any other recourse besides small claims court. The contract says that in the event that the buyer defaults, I can "declare a forfeiture and be entitled to the deposit as liquidated damages." How do I go about that?
Customer: replied 6 months ago.
I should add that all 10 offers were not cash offers. I had 10 offers: 2 were cash, 8 were FHA. The other cash offer has since found another home.
Expert:  WiseOwl58 replied 6 months ago.
It's a forfeiture because the buyer breached the contract. Therefore you are entitled to damages. Tell the escrow company that the buyer has breached and the agreement is terminated therefore they should send the earnest money to you. Please rate 4 or 5 and close out the question. Good luck to you. I wish you all the best.
Customer: replied 6 months ago.
Again, the escrow company cannot release funds without the buyer's signature.