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JANUARY 8, 2019 • Stay Connected!
I have been asked a few times about non-refundable earnest monies. If a seller, who is a builder, is requesting that earnest monies be released and become non-refundable, what precautions can be put in place to help protect the buyer? My agents get worried about writing language concerning such an issue. The main concern being how to protect the buyer in the event the seller does not perform? Any suggestions or thoughts you can share that you have seen from other agents?
The Hotline lawyer cannot give broker the answer to this question that broker is seeking because it is the opinion of the Hotline lawyer that brokers should not be drafting language in a PSA that converts buyer's EM to some form of a non-refundable deposit or fee. There is language in the statewide forms Pre-Sale Addendum that allows seller/builder to collect a non-refundable payment for certain upgrades requested by buyer but that is the only language in the statewide forms system that makes any buyer deposit nonrefundable. If seller/builder can utilize those provisions of that form, then broker can create "non-refundable" money for seller/builder.
Otherwise, the responsible way for sellers to convert buyer's EM to a non-refundable fund is for seller to require buyer's waiver of all contingencies. If buyer has no contingencies, then buyer has no legal excuse for failing to perform the terms of the agreement and no right to recover the EM if buyer fails to perform the terms of the agreement. Similarly, however, if buyer has a contingency, then buyer's EM IS refundable if buyer triggers that contingency, notwithstanding a "non-refundable" provision to the contrary ... or at least buyer has that argument to make in defense of seller's retention of the EM based on conflicting terms of a purchase agreement drafted by a real estate broker. It is never okay for a real estate broker to draft a purchase agreement including terms that conflict with one another.
If "non-refundable" money is important to seller, then broker should advise seller to consult seller's lawyer for assistance in drafting a non-refundable provision. If seller's lawyer drafts an addendum and instruct seller's broker to include it with any counteroffer signed by seller, then listing broker must follow those instructions. Listing broker should not, however, draft the non-refundable EM provision for seller.
If broker represents buyer in this situation, then broker should advise buyer to seek legal counsel because the brokers discussed in this question are correct … buyer's EM will likely be lost forever if it is released to seller prior to closing and seller is unable or unwilling to close.
The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to firstname.lastname@example.org or leave a message at 800.562.6027. Please include your NRDS number.
Unlock the Door Campaign Launches
You may have seen the "Unlock the Door" ad airing during the football game last the weekend or maybe you heard the radio ad. Washington REALTORS®, in part with a coalition of other non-profits and for profits, have come together to form Unlock the Door for Affordable Homeownership. The group aims to work with our elected officals to solve the growing housing crisis in our communities.
MIPIM is the largest commercial investment event in the world March 12-15th located in Cannes France. We have partnered with Greater Seattle Partners and CCIM to represent investment opportunities in Washington State. If you represent a multi-million dollar investment opportunity or property, you may want to join us. Contact Stacie Weedon for additional information.
(Source: REALTOR Mag) A power shift is occurring in the housing market with more negotiating power landing on the buyer’s side. Home values moved 5.1 percent higher this past November compared to November 2017, according to a new report by CoreLogic. However, appreciation growth is starting to curtail from its 5.4 percent annual gain in October...
(Source: YPN Lounge) Every year we all sit down and make a list of New Year’s resolutions that we swear we are going to stick by for the entire year....As real estate professionals in markets that are consistently inconsistent and increasingly competitive, stress can attach itself to this career and make it easy to lose focus on those once promised resolutions. No matter what resolutions you’ve vowed—real estate related or not—these four tips will help you achieve your goals...
(Source: WR Tech Helpline) PDF files are so prominent, you probably have at least one open on your computer screen right now. Many people utilize and share PDF files as documents or contracts in their business and daily life. Because at Tech Helpline we often get calls from real estate professionals asking about this file format, today we bring you the top 6 things real estate professionals need to know about PDFs.
Register for the 2019 Legislative Day event! Join us in Olympia for two amazing days of networking and meeting with your Legislators. Hundreds of REALTORS® from across the state come together to advocate for property owners, home buyers and the real estate industry. First-time attendees get in free (see details)...
The real estate industry has become more complex than ever before and having access to a real estate attorney is ideal for your business. Enter Annie Fitzsimmons; the Washington REALTOR® Legal Hotline Lawyer!
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