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Buyer is entitled to return of full deposit

June 9, 2017
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

I was in the middle of a short sale, since my property was being foreclosed. The bank never approved the short sale, as they kept saying I didn't send them tax returns, which I definitely did. My buyer put $10,000 in escrow to purchase my house, and was ready to close this week. However, I was representing myself in the foreclosure action and missed several deadlines, so the house sold at foreclosure sale last week. I feel that the sale was because of the bank's incompetence, and that I should be able to keep the deposit by the buyer. The buyer is demanding return of the $10,000. It's not my fault that the bank was so slow in dealing with the short sale.

- Travis M.

Dear Travis,

We have seen thousands of foreclosures over the past several years, and the way they are handled depends on many factors, including who your lender is, who is representing you and the judge that is on the case. First, I assume you borrowed money to purchase your house, possibly during the bubble. Although the wild fall and steady rise since 2011 is unfortunate, it does not generally change the fact the money is owed to the lender. Many lenders offered short sales and a waiver of any deficiency, while others pushed aggressively to foreclose on borrowers who didn't pay. In the cases I dealt with, the banks often misplaced documents and required them to be sent multiple times. I would always advise my client that, while inconvenient, it is needed to provide documents when requested to move the process along, which could lead to relief from the amounts owed. The lenders generally would postpone activity in a foreclosure action when the borrower actively was seeking a short sale. This is because, for the most part, banks are not interested in owning and managing property they are interested in obtaining the most money possible for their loan. Courts also will postpone sales where a short sale is imminent. In your case, it sounds like insufficient arguments were made to the court to stave off the sale. I know very few people that regretted hiring an attorney to defend them in a foreclosure action.

Addressing your question, it sounds like you breached the contract for sale since you no longer can transfer title to the Buyer. If so, the Buyer is entitled to return of their full deposit. Clearly, the buyer is not responsible for you losing your home, and should not be punished for entering the contract with you. Keep in mind that, when a party to a real estate transaction attempts to keep a deposit they are not entitled to, that party could be held responsible for the attorney's fees incurred by the Buyer to obtain the refund. Based on the information provided, you should sign the Cancellation, and authorize the release of funds to the Buyer immediately.

Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continued his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest from 2011-2015, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.

 
 
 

 

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