What happens to my good faith deposit if the seller doesn't respond to my offer and we opt out of buying?

We made an offer on a short sale house, it is in escrow and we put a good faith deposit down on it. The sellers lender hasn't responded to our offer. We are thinking of not waiting around. Do I get my deposit back?

if you don't, sue them for it.

The seller should not have cashed the check. It should not be cashed or deposited until the offer is accepted.

I hope you put an expiration date in your offer. Then, if they do not accept by the specified date, you get your money back.

The law varies from state to state. Also the language and terms of your contract will control whether or not you are entitled to have your deposit returned.

You did not say who has your deposit. That is extremely important.

You deposit should be in an escrow account at the title company, not with the seller and not in a real estate broker's trust account.

Yes, I know real estate brokers can have trust accounts, but I will never permit a deposit check of mine to go into their trust accounts.

I take my check for the deposit directly to the title company myself and deposit the check in the escrow account myself. I never let a real estate agent, broker or REALTOR get their hands on my check.

If you have cancelled the sale because the seller has not met the terms of the contract or one of the contingencies in the contract, the seller should agree to sign instructions directing the title company to return your deposit.

The seller must sign instructions directing the title company to return your deposit.

If the seller will not sign those instructions voluntarily you must contact an attorney who specializes in real estate law immediately.

Your attorney will contact the seller and the seller's agent and the bank. Your attorney will explain to them in great detail all of the extremly bad things that will happen to them if they unreasonably fail to sign documents directing the title company to return your deposit.

In my experience, even the most disagreeable seller will give in at that point and sign the documents directing the title company to return your deposit.

If your deposit is in a REALTOR's trust account you may have to file a complaint against that REALTOR with the state department of real estate. I recommend that you let your attorney handle that for you.

Have your attorney specifically request that the REALTOR's trust account be audited..

I have never yet met a REALTOR who was competent at meeting all of the legal and record keeping requirements that he must meet with a trust account.

At the very least, by the time you are done that will be one less REALTOR with a trust account, and that is a good thing.

In my opinion, Deposits for the purchase of real estate belong in an escrow account at a competent title and escrow company and nowhere else.

Essentially, you may have to contact an attorney to convince the seller to sign the necessary documents to direct the title company to return you deposit from the escrow account.

In almost all cases, if you will follow the instructions that I have given you, your deposit will eventually be returned to you.

You're stuck. The only way out is if you aren't approved or have a loophole as in you must be approved in so many days. In California you loose your deposit if you back out. Check with your broker or a real estate attorney.

I've bought and sold 4 homes 3 in California and one in Maryland.

I also was an agent for a period of time.

I'm assuming that the "good faith deposit" you're talking about is actually what we usually call "earnest money".

If that's the case, then there is no problem. The check isn't normally even deposited until there is what we call a "signed around" agreement, where both sides have agreed on price and terms. You can cancel an offer at any time before the other party responds.

Tell your agent to cancel the offer and return your earnest money. He/she may not be happy about that, but if he/she doesn't immediately provide the cancellation of offer form for you to sign, then talk to the broker. If your check has not been deposited into an escrow account, it should be returned to you. If it has, then there may be a short delay, normally not more than a couple of business days.

Then watch as the agent puts the form into the FAX machine, and get a copy of the confirmation report that proves when it was received by the listing agent.

(If you are using the listing agent to write the offer, get a signed and dated copy of the form, signed by the agent. If you are given any problems, ask to talk to the broker. This is one reason you don't generally want to use the listing agent to help you write an offer.)

What does your contract say?

It also depends upon the law in your state, but the primary variable is the contract you both agreed to.

The standard contract in California is contingent upon seller ability to deliver clear title (and usually, title insurance) on the property within the stated escrow period. If they can't do that, in general, you have an out.

This doesn't mean you can force them to release your deposit without going through the appropriate legal channels, but if they're smart, they'll do it. Your agent should understand how to write termination instructions that don't compromise your rights.

Check with a real estate attorney for all the details, of course.

This depends on the real estate law in the area that you are buying.

The first thing to do is call the escrow company. See what they tell you. They will be familiar with the law in that area and may be able to point you in the right direction. If they (lender) have not responded you have no contract with the lender. They (escrow) may be able to direct you on how to rescind your offer to purchase the property before it is mutually accepted, and then they will refund your money after a processing period, usually two weeks. I live and work as a Realtor in Seattle, WA, so this is what my experience has been. Like I said though, laws vary state to state.

stop payment on the check if it hasn't cleared

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