Q: Last year, I put down $2,000 in earnest money on a house. In June, the seller agreed to close in July. In late July, the seller canceled the closing date and was unable to provide a new closing date.
Since I needed a place to live, I verbally stated I would no longer be interested in purchasing the home if we couldn’t agree on a closing date. I began looking for another home and gave the sellers of the original house several opportunities to set a closing date.
Once I said I was no longer interested in purchasing the home, and signed the form to have my cash returned, they set a closing date. But it was too late.
I have since purchased another home and the sellers will not release my earnest money. Also, due to an error on the gas company’s part, the heat was disconnected and the sellers claim the water heater broke.
They offered to return half of the earnest money to replace the broken water heater. Is this legal?
A: Let’s start at the top of your letter. What did the terms of your contract say about cancellation of the agreement? Were you required to send the sellers written notice to effectively cancel the contract? Or, did the contract die when they failed to set a closing date? Did you have a real estate agent help you with the contract? Or, did you hire an attorney?
If you hired a real estate agent, what has he or she been doing to help you with this problem? If you didn’t use a real estate agent, and you didn’t use an attorney, it’s easy to see how you’ve gotten caught in quite the tangle. You had no one advising you on these serious legal matters.
Can the sellers hold you liable for a mistake their gas company made? It’s unlikely. Unless you owned the house and controlled it, it’s their property and they needed to keep it in good condition. If the water heater broke, I can’t see how this would be your fault. And, I don’t know why you’d think for a moment that you would have to pay for it.
Still, they’ve made you an offer (to give you back half of your earnest money) and now you need to respond.
Your first move should be to hire a good real estate attorney to explore your legal options. But don’t be surprised if your attorney tells you it isn’t worth suing for $2,000, or may want to charge you at least that much to take the case.
This doesn’t mean you’re wrong and the sellers are right. It’s just that small claims court might be a more affordable venue.
May 22, 2008.