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YOU HAVE QUESTIONS, WE HAVE ANSWERS!
VIVA ESCROW Q & A SEGMENT
(Real questions emailed/called in to us)
I made an offer and the Seller countered with a 15 day escrow and 2 day physical inspection contingency. The counter offer also asked that once the physical contingency was removed, the good faith deposit would be released to the Seller. I signed the counter offer.
2 days later my broker sent me a contingency removal, which he forced me to sign so that we could continue. I really want the home and the market is so competitive now. I have been looking for months. However, I told the broker that I wanted to re-negotiate the time period to 30 days. 15 days was too short a time for me to get a loan. The Seller refused to re-negotiate the time limit.
The escrow officer sent me an email advising that per the real estate contract and counter, she had to release the deposit to the Seller as I had removed the physical contingency. But I told her that I did not sign any of the escrow opening paperwork that she sent me and so there was no real escrow. She said that it did not matter as I signed the contract and the contingency removal and the Seller was due the good faith deposit even though I did not sign her escrow paperwork.
Can you advise what you would have done?
A real estate purchase contract and all its addendums and counter offers, are a contract between parties. Once signed you have a contract and any dispute will fall under contract law. The most popular real estate contract used in California and put out by the California Association of Realtors is called the “California Residential Purchase Contract and Joint Escrow Instructions”. If this is what was used in your transaction, then once it is handed to escrow, it also becomes an agreement in escrow and everyone is then bound to perform by its agreed terms. The escrow officer may prepare other escrow opening documents, including any “Escrow Holder’s Addendum” to that CAR contract, but they are separate and do not affect the status of the original CAR purchase agreement. You will be held to that agreement under contract law.
If this transaction were one of mine, if I have the good faith deposit, the purchase agreement and the contingency removal, and I have acknowledged that I will be the Escrow Holder, then by that contract I would be obligated to release the funds if demanded by the Seller, unless you send me written instructions to not go forward with the transaction. It does not matter if my other escrow paperwork was signed or not. However, this is a management decision of our company, and other companies may differ in the interpretation of everyone’s duties and responsibilities.
I definitely recommend that you talk to an attorney for legal counsel on what you should do.
Here are the main concerns that I would point out (there could be others, specific to a particular transaction):
- If you are getting a loan, you should know that a 15 days closing time will not be sufficient. Why accept a counter offer with that clause and then try to come back and re-negotiate for more time?
- If you know that the physical inspection is the only contingency to be removed before the Seller gets your good faith deposit, why did you sign a removal of the contingency if you were not ready to have the deposit released?
- Once you have signed the contract you are obligated to perform under its terms. If you don’t perform you may very well lose your good faith deposit. Real Estate agents usually will give you a Notice To Perform and then you must decide your next step.
If you are the Buyer, why would you even allow yourself to get to the point in which your good faith deposit is at jeopardy? Carefully consider the terms that you are agreeing to. Can you perform to its conditions? It’s never good to write or negotiate a contract under emotional circumstances.
~ Funny Video of the Month ~
The science behind why your wife is always right:
~ Quote of the Month ~
When I ask for directions, please don’t use words like “east”.
(Source unknown but it must have been a woman)
We often get asked, why do we use a Grant Deed? When do we use a Quitclaim Deed? What are the differences and how does the public know which one to use?
Here is the link to my video to answer your question:
You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
The opinions expressed in this blog are solely the author’s.
Your comments and viewpoints are always welcome.
Info @ VivaEscrow.com