Hi, I am a new student and I have a question related to performance as it relates to Earnest Money.
If a buyer is required to deposit earnest money to be held in escrow and that buyer gives the holder… in this case a title company explicit instruction NOT to cash the check but hold it, does this invalidate any agreement as earnest money is to be held in escrow. My contention here is that a check being held with explicit instruction NOT to cash is just a piece of paper and not actual funds until it is cashed and deposited in an escrow account.
As the seller am I obligated to perform under these conditions or did the buyer fail to fulfill the terms of the agreement and therefore break the contract.
TIA – KR
Interesting questions. Here’s how I analyze it: A buyer cannot give such instruction to the title company without the seller’s agreement. The REPC is a state required form and the language directs the buyer to deliver earnest money to the buyer’s brokerage. If the buyer would rather the check be held by the title company, the seller and buyer would have to agree to that in an addendum to the REPC.
As far as holding vs. depositing, this I can’t answer. Title companies are governed by even stricter and more encumbering regulations than real estate brokers. Because I’m not a title company attorney, I honestly don’t know if the regulations would permit a title office to merely hold a check without depositing it. If a buyer desired this, I would advise the real estate agent to call the title company and see if it was permissible for them to hold the check. If so, the agent could then draft the addendum accordingly.
Hi Brian, Thank you so much for the great information… thats very helpful.
Its interesting that I am going through this while I’m in the process of getting licensed. I’m handling my brothers estate who died without a will hence I have had to lobby for and acquire power of attorney to act as executor of my brothers property.
Some additional history… I made a deal with a local real estate investment firm to purchase the property but there were complications
We settled on $130 for 4 parcels (2 small homes and 2 small pieces of land) on Harrison Blvd because of the run down nature of the property
He (we will call him MS) was to have deposited 10K in escrow, He ckaimed he but infact failed to do so merely alluding to it. I later found out from the title company that a check was being held with explicit instructin s not to cash it. This also proved to be an exageration as there was never a check being held either.
I did not know any better and my agent did not question it. In reference to your earlier point I did not give him express permission via addendum to deposit it at the title company.
At this time I learned that one of the homes was leveraged by 2 mortgages and had a judgment against it.
The total of the the 1st 2nd and the judgement exceed the price for all 4 of the parcels.
I could not PERFORM as I would have been in the hole while trying to liquidate my brothers prperties
I then found out about the escrow and myself along with my realtor informed them that they were in breach of contract because they failed to meet the criteria fo escrow in the time alloted. and have to date shown me no evidence of it.
Now he is threatening to force me to perform and I considered the deal pulled back in early December when I discovered the liens that I had to work through and the fact that he had never actually deposited REAL MONEY in escrow.
Man I’m getting more of an eduacation than I wanted… LOL
Forgot to say how much I love the course. I’m insanely excited to get out there and be the best Real Estate Agent I can be. Love the forum and the support from the Stringham team. The course work and the new video’s are excellent!