Bev,

Thank you for the information. Each post has a little to be learned from it even though I'm in the Lone Star State.

Frosty,

I would speak with your Agent and if deemed necessary an Attorney. Not sure what your sales conditions are there but if it were me I would allow the buyer to go to another financing attempt, this time legally, with one provision. The provision is they either obtain the financing quickly or forfeit their earnest money deposit. As always obtain it all in writing and signed by everyone.

Sometimes it is better to get the deal done than try to press an issue!

Good luck and keep us posted.

Emmanuel J. Scanlan
PS Inspection & Property Services LLC
http://www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor

Knowledge is power, but sharing knowledge brings peace!!

Hi Emmanuel,
Yes, I have had experience in similiar situations. I can answer your questions but I reccommend that anyone contact an attorney . My answers should not be taken as legal advise.
1. Yes, there is a standard PAR release form in Pa.

2. If the Buyers signs the release it does terminate the existing agreement and allow the seller to take another offer even before earnest money is dispersed.

3. If the Buyer refuses to sign the release but seller signed the release, it may depend on if they are out of contract. I would contact an attorney. There is a clause in the mortgage contingency regarding mortgage committment date where the seller can terminate the contract, however that would entitle the Buyer to get bck the deposit money.

4. If the seller did commit fraud and misrepresent herself that is the basis for the release, which does make the contact null and void.
Hope this is helpful.
Bev Kalb
Century 21 Longacre Realty
610-845-6000 x 208
610-442-6897 direct http://www.century21longacre.com

Hi Bev,

That is interesting and hopefully the contract did carry the clauses you pointed out. You sound as if you have either had experiences with this or are very familiar with the process. I do have questions myself that might also help Frosty make a decision. I know you are not an Attorney but just from your experiences or from what you have potentially seen could you answer these?

1. Is there a standard release for the buyer to sign and forfeit the earnest money?

2. If the buyer does sign it does that effectively terminate the existing contract and allow the seller to immediately take other offers on the home and go to closing regardless if the earnest money is actually dispersed or not?

3. If the buyer refuses to sign the release and If Frosty chooses to take legal action, whether small claims or through an Attorney, does that freeze the contract and also place the home in a limbo state (unable to relist or sell) until the issue is settled?

4. Due to the misrepresentation of the buyer I would expect that the contract could be declared null and void? If Frosty were to choose to continue selling to the buyer and wait for them to obtain financing what would be a good way to protect himself in the event the secondary attempt at financing fails? Frosty has already lost a potential other buyer who may already have moved on and may not be interested in the home.

Emmanuel J. Scanlan
PS Inspection & Property Services LLC http://www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor

Knowledge is power, but sharing knowledge brings peace!!

Yes, if in the agreement of sale the mortgage contingency block was elected, she would be able to get her earnest deposit back if she could not obtain financing. However, if she filled out and sighed a PAR Buyers
Information form there is a clause that states: Buyer(s) affirm that the above information is true and correct. Buyer(s) understand that the information may be used as a basis for the acceptance or rejection of an offer by the seller. Buyer(s) further understand that the information may be provided to a lender in conjunction with the placement of a mortgage loan. Buyer(s) acknowledge that failure to provide truthful and correct information may result in the forfeiture of any deposits made by Buyer(s) and may subject Buyer(s) to other financial loss or penalties. If she purposely gave wrong untruthful information to her lender and was found out, she does put her earnest money at jeopardy. If you do not have attorney, ask your Realtor to call the PAR legal hot line for advise. If she refuses to sigh a release giving up the deposit money, small claims court is the next step. If Court is in your favor, she will be also ordered to pay your court costs. I would suggest contacting an attorney. Perhaps your Realtor's office has one on retainer. Good luck!

Emmanuel, thank you for answering.

From what I have heard she originally filed the mortgage application fraudulently since she said this house would be her primary residence. She said that her RE Agent was aware that this house would be an investment property for her. The lender learned of her new job and said that she had to get an investment mortgage. From my understanding, if she is able to get financing it will be an investment mortgage.

It doesn't seem logical to me that after all the misrepresentations on her part, she would be entitled to the earnest deposit money. She seems very confident that as long as she can't get financing she is in the clear. Not sure if she has done this before and is more savvy about this stuff?

We had two offers on our house; we decided to go with her since she appeared to be more financial stable, then we learned that isn't correct based on misrepresentations on her AOS and BFI. Isn't that enough to show why she isn't entitled to the earnest deposit money?

I'd prefer to have the sale go through but don't have any confidence in her based on her actions.

Is it worth going to an attorney? If so, how do I find a good RE Lawyer? I want to find my own and not rely on my RE Agent.

Hello Frosty,

Sounds as if the buyer has fraudulently filled out a mortgage application. Do both you and your RE Agent know that this is an investment home and not a primary residence? If so then you should be having a long talk with your RE Agent and an Attorney about how to proceed. If you continue with the sale you are aiding the attempt at fraud. It may never come back around to you but if it did you would not be in a good position for anything.

I'm not an Attorney but I can't see how the buyer can justify an earnest money refund while attempting to commit fraud?

Good luck!

Emmanuel J. Scanlan
PS Inspection & Property Services LLC http://www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor

Knowledge is power, but sharing knowledge brings peace!!