In his Inman News column on Thursday, August 23, 2007 Robert J. Bruss had a question from a buyer buying a home that is being sold by an unrepresented seller (FSBO for for sale by owner.)
“Home buyer’s deposit check cashed too early
If the sale doesn’t close, can money be refunded in FSBO deal?”
DEAR BOB: Can a home seller use the buyer’s earnest money good faith deposit to make repairs to the home and not tell the buyer? Or is the deposit used only at the closing? I am concerned because we are purchasing a “for sale by owner” house and I noticed the lawyer already cashed our check. Is this “normal” for the seller to get our money before the sale closes? –Tonya G.
DEAR TONYA: No, it is not “normal” for the home seller to receive the buyer’s deposit money before the sale closes. For your protection as the buyer, you should make the deposit check payable to the firm that will be handling the closing of the sale.
Unless you made the deposit check payable to the seller, the seller should not be able to obtain those funds until the sale closes and the title transfers to you.
If the lawyer is holding the deposit funds in his trust account, that’s fine. However, if the seller has your money and, for some reason, the sale never closes, getting your deposit refunded could be a big problem, especially if the seller spent the deposit money.
Your situation shows another danger of buying direct from a home seller without the benefit of an experienced real estate agent to protect both parties.”
Cashed too soon? I think Bob real estate guru that he is missed a couple of points here… or maybe it is that whole real estate is local thing along with “READ the contract.”
Check cashed too soon? In Central Ohio, the check would have been cashed if it was being held by a real estate company, a title company, the seller or an attorney. Are there places in the country where the uncashed check sits in the file until closing?
The purchase contract contains all the terms of who holds the money.
While I love Bob Bruss and I certainly love the line
”Your situation shows another danger of buying direct from a home seller without the benefit of an experienced real estate agent to protect both parties.”
this column puzzled me.
I think I worked with a buyer a few years ago who bought a home that was not listed and the seller insisted on holding the earnest money. It was not in the buyers best interest but I believe he agreed to it. As small as earnest money is in Central Ohio, it is not going to pay for a lot of repairs anyway.
As a buyer you and your earnest money are protected by the terms of the standard language in the CBR (Columbus Board of REALTORS®) contract. Typically the earnest money is held in the escrow account of the real estate company working with the buyer in a transaction in Central Ohio. They can’t just hand back the buyers money though… it’s all spelled out in the contract.
The CBR contract advises buyers and sellers to seek legal representation.
Contact me today. I’ll handle the details.
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The new executive director of the Columbus Landmarks Foundation is Kathy Mast Kane according to Columbus Business First. Kate Matheny who was the executive director of the Columbus Landmarks Foundation resigned in January 2007.
