Dear Mr. Azrael,
What can be done when a seller backs out of a transaction, doesn't show up for settlement, and the buyer's deposit has never been returned? The real estate company who handled the transaction has been totally unprofessional, uncaring and unsympathetic to the buyer's dilemma.
The real estate company has told the buyer to get a release from the seller of the escrow deposit. The seller won't speak to the buyer, the real estate company or the attorneys involved.
Instead of the real estate company doing "the right thing" and returning the money to the buyer, the burden is on the buyer. Now the buyer has to sue the seller to get their earnest money back even though the real estate broker has the money. Please explain the logic and sense of fair play in all of this to me.
Dear Ms. Welty,
You are wrong to accuse the real estate company of being unprofessional in refusing to return the buyer's deposit. The broker is only following a regulation published by the Maryland Real Estate Commission.
This regulation requires that when a dispute arises between the buyer and seller as to the disposition of deposit money in a real estate transaction, unless the contract provides to the contrary, the broker shall either:
Hold the funds until he or she has releases signed by all parties to the transaction;
File a suit, naming the buyer and seller as parties, and pay the disputed deposit to the Registry of the Court; or
Hold the funds until one of the parties files suit and the court in which suit is filed orders the disposition of the funds.
This regulation prohibits the broker from deciding on his or her own which party is entitled to get the deposit.
However, to make it simpler to return money when there is no dispute, the General Assembly, in its last session, passed legislation that allows brokers to notify the buyers and sellers of the intent to release deposit money and gives them 30 days to protest the release.
If there is no protest, the deposit will be returned to the buyer even if the broker doesn't hear from one of the parties. If one of the parties protests, then the broker is not permitted to return monies until legally allowed to.
In your situation, because the seller will not sign a release, agreeing to return of the deposit to the buyer, the broker cannot unilaterally decide to return the deposit to the buyer. The logic of the regulation is that the broker is merely a "stakeholder" of the deposit and only a court can decide which party is legally entitled to the funds.