Yeah, just want OP sister to get her EM back. This Could have been avoided but difficult situation here and in her life. Hope it works out.
Earnest Money Refund?
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Last: 2 yr ago by Diggity
There's one person who wasn't fully clear in the transaction chain. That's the person who should be on the hook for the costs of a canceled transaction… and I think OP knows who that person is if being objective about it…
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$20K is a lot for earnest money on a new build. My client bought a new build with Lennar Homes and only paid about $2500 for earnest money. The purchase price was about $440K from what I remember.
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I get what you're saying for sure.
Short of some language that we're not seeing (or parts that we're missing), appealing to the heartstrings/sympathy of the builder reps might prove more fruitful than litigation. As Steve said, these builder contracts are very one sided.
That may have already been attempted.
Short of some language that we're not seeing (or parts that we're missing), appealing to the heartstrings/sympathy of the builder reps might prove more fruitful than litigation. As Steve said, these builder contracts are very one sided.
That may have already been attempted.
The builder's first response was that they were not giving back the earnest money.Quote:
appealing to the heartstrings/sympathy of the builder reps might prove more fruitful than litigation
The contract is 46 pages long. I did a simple search and the word "cash" doesn't appear anywhere in the contract.Quote:
Again, we don't have the whole contract, and I would be surprised if there were no mention of what the obligations are for cash offers, so we're all just speculating.
I don't know what you've already done, but you might arrange a meeting with a decision maker at the company and go in there with your sister to explain the situation. Even if you get them to agree to give back a portion of the deposit, that would likely be a win.PlanoAg98 said:The builder's first response was that they were not giving back the earnest money.Quote:
appealing to the heartstrings/sympathy of the builder reps might prove more fruitful than litigation
This is all assuming you have a lawyer review the contact, but I don't see any obvious outs from what you've shared so far.
PlanoAg98 said:The contract is 46 pages long. I did a simple search and the word "cash" doesn't appear anywhere in the contract.Quote:
Again, we don't have the whole contract, and I would be surprised if there were no mention of what the obligations are for cash offers, so we're all just speculating.
46 page long in-house contract. Another raised flag. One reason I do in-house contracts is to go from 15 pages to 6-7 pages.
Yes, hence the raised flag comment. And especially for a spec. Highest I do in most all spec build circumstances is $7500-$10000.
reminds me of a builder I used to deal with a lot in Houston.
The sales rep would always brag about using the TREC builder contract because it was so balanced.
Then they would add 50 pages of addendums that basically changed the entire spirit of the contract.
So generous!
The sales rep would always brag about using the TREC builder contract because it was so balanced.
Then they would add 50 pages of addendums that basically changed the entire spirit of the contract.
So generous!
New build contracts are written to protect the builder.
I had one recently where the deposit was $72K.
People can say what they want but a good buyers agent is worth every penny.
I had one recently where the deposit was $72K.
People can say what they want but a good buyers agent is worth every penny.
PlanoAg98 said:Quote:
Not to sound like a broken record here, but you need to read the contract.
Was the "contingency period" to obtain financing?
Because if she stated she would paying cash and showed proof of funds, that would waive the contingency, as financing no longer needed.
I think this is the "nail in the coffin" response.
Finance Contingency. Purchaser agrees that M/I shall not execute this Purchase Contract until Purchaser provides to M/I a mortgage loan prequalification letter provided to Purchaser by M/I's affiliated mortgage lender, M/I Financial, LLC. However, Purchaser understands and acknowledges that Purchaser is under no obligation to actually obtain a mortgage loan from M/I Financial, LLC. The obligations of Purchaser under the Agreement are contingent upon Purchaser obtaining a mortgage loan commitment from an institutional mortgage lender of Purchaser's choice with an interest rate and other terms and conditions acceptable to Purchaser ("Finance Contingency") within twenty (20) days after the Effective Date ("Contingency Period"). Purchaser agrees to apply for a loan within five (5) Business Days following the Effective Date. If Purchaser is unable to obtain a loan commitment for an acceptable loan program prior to expiration of the Contingency Period, Purchaser shall have the right, at Purchaser's option, prior to the expiration of the Contingency Period, to terminate the Agreement by giving M/I written notice of such termination in accordance with 14(i) of this Purchase Contract in which event the Deposit shall be returned to Purchaser and the parties shall have no further rights, obligations, liabilities or remedies under the Agreement (except as set forth in 14(g) of this Purchase Contract). If Purchaser does not give M/I such notice on or before expiration of the Contingency Period, then Purchaser shall be deemed to have satisfied and/or waived the Finance Contingency. Purchaser acknowledges that the Finance Contingency shall be deemed satisfied if Purchaser locks an interest
rate with M/I Financial, LLC ("MIF"), and, within the Contingency Period, MIF provides Purchaser with a loan commitment at such interest rate. Purchaser further acknowledges that after the Contingency Period, Purchaser's obligations under this Agreement are not conditioned upon an appraiser's or mortgage company's determination of a minimum value of the Property, except in the case of an FHA, VA or USDA loan. It is Purchaser's sole responsibility to comply with all terms and conditions of the loan commitment
14i. Notices. Any notice given pursuant to 2, 5, 9(b), 10 or 11 of this Purchase Contract shall be in writing and shall be given to M/I (addressed to the attention of the Area President and VP Sales and Marketing) by fax (630-883-0944) or overnight delivery to the following address: 2135 City Gate Lane, Suite 620, Naperville, IL 60563. Any such notice shall be deemed to have been given upon receipt by M/I.
OP, I have five questions. Please answer them when you can.
1. How is "Effective Date" defined in this contract?
2. Did M/I sign the contract?
3. Did your sister provide a mortgage loan pre-qualification letter from M/I financial, LLC to M/I?
4. Did your sister obtain a loan commitment from an institutional mortgage lender within 20 days after the effective date?
5. Did your sister provide proper notice of cancellation in accordance with the last paragraph you quoted?
SteveBott said:
I would call the lawyer who first read the contract and ask him/her. If they think she has a case then find out what it cost for the lawyer to get them money back, ON contingency. If he has a good case he will go with it. If not he wants to charge by hour you know you are in a weak position.
Good lord, this is not how lawyers work, and it's not how the legal system works. What an ignorant post.
In a construction contract situation, I would highly advise having a real estate attorney who is familiar with construction contracts be the one to advise on the contract. Agents are valuable in real estate, but they have a limitation in that they can't give legal advice. Definitely need legal advice in what is likely one of the biggest, if not the biggest, transactions in someone's life. Full disclosure, I am an attorney that deals extensively in real estate/ contract matters and I am also a licensed broker.
So are you stating you can negotiate a better contract with a builder then their standard contract offer?
As a seller, I only accept a trec contract and limit addendums to two pages. Won't waste my time with anything else. And no micro print accepted. Keep it simple and stay in control.Diggity said:
reminds me of a builder I used to deal with a lot in Houston.
The sales rep would always brag about using the TREC builder contract because it was so balanced.
Then they would add 50 pages of addendums that basically changed the entire spirit of the contract.
So generous!
When you mention "negotiate a better offer", I'm assuming you are talking about terms and not just the price. The short answer is yes, most of the time. There is the occasional builder that will say take it or leave it on the terms, however, they are the exception rather than the rule.Some contracts end up with several interlineations, deletions, additions, special provisions, etc.
nvm.
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100% agree. It doesn't matter if it's a new build or resale, it's important to have representation.Braxton.Sherrill said:
New build contracts are written to protect the builder.
I had one recently where the deposit was $72K.
People can say what they want but a good buyers agent is worth every penny.
Sponsor Message: We Split Commissions. Full Service Agents in Austin, Bryan-College Station, Dallas-Fort Worth, Houston and San Antonio. Red Pear RealtyAustin Monthly
is it common for a buyer to owe anything to a buyer's agent in a transaction like this or is the commission still 100% coming from the builder? seems like a no-brainer to me but as we see here many people are ignorant/uneducated on important matters.
The builder pays the realtor as the procuring cause. The buyer should not be paying the realtor anything in this transaction.
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swimmerbabe11 said:
The builder pays the realtor as the procuring cause. The buyer should not be paying anything in this transaction.
Werd! Buyer does NOT have to pay commission fees. The builder either pays the buyer agent commission or pockets it.
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Red Pear Felipe said:swimmerbabe11 said:
The builder pays the realtor as the procuring cause. The buyer should not be paying anything in this transaction.
Werd! Buyer does NOT have to pay commission fees. The builder either pays the buyer agent commission or pockets it.
what about a 3-6% discount on sales price
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aggiepaintrain said:Red Pear Felipe said:swimmerbabe11 said:
The builder pays the realtor as the procuring cause. The buyer should not be paying anything in this transaction.
Werd! Buyer does NOT have to pay commission fees. The builder either pays the buyer agent commission or pockets it.
what about a 3-6% discount on sales price
Builder still pays for buyer agent commission. I believe Lennar was running a deal and gave my client 6% of flex pay. They still paid for my agent commission.
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The earnest money is in the process of being refunded.
Ended up she had sent an email to the builder contact that she had been dealing with requesting the contract be terminated and the earnest money be returned. After I read the contract more thoroughly, I recognized this was not the appropriate way to terminate the contract.
Any notice given pursuant to 2, 5, 9(b), 10 or 11 of this Purchase Contract shall be in writing and shall be given to M/I (addressed to the attention of the Area President and VP Sales and Marketing) by fax (630-883-0944) or overnight delivery to the following address: 2135 City Gate Lane, Suite 620, Naperville, IL 60563. Any such notice shall be deemed to have been given upon receipt by M/I.
Once I asked her to do this and she did, they became more cooperative with discussing the earnest money.
Ended up she had sent an email to the builder contact that she had been dealing with requesting the contract be terminated and the earnest money be returned. After I read the contract more thoroughly, I recognized this was not the appropriate way to terminate the contract.
Any notice given pursuant to 2, 5, 9(b), 10 or 11 of this Purchase Contract shall be in writing and shall be given to M/I (addressed to the attention of the Area President and VP Sales and Marketing) by fax (630-883-0944) or overnight delivery to the following address: 2135 City Gate Lane, Suite 620, Naperville, IL 60563. Any such notice shall be deemed to have been given upon receipt by M/I.
Once I asked her to do this and she did, they became more cooperative with discussing the earnest money.
Great news!
Nice! Glad they were willing to work with you
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