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Can Broker return Buyers earnest money deposit despite non-performance and no permission from Seller?

Fall River, MA |

As a Seller by Owner, I emphasized to everyone that I will NOT pay broker fees. I received a signed cash Offer with $1000 deposit, waiver of home inspection, NO request for me to pay a broker fee. I accepted a verbally with condition that 100% proof-of-funds are produced upon signing P&S (buyers gave partial). Before attorneys would draft P&S, I had to accept Offer in writing, which I did, yet Buyers would not sign P&S unless I split Broker fee! I refused. Broker confirmed in writing that clients were clear on fee. Buyers’ attorney says that I never considered the condo under agreement unless P&S was signed and there was no "meeting of minds". False. I rejected 2 other Offers and paid attorney. Broker gave $1000 deposit back to Buyers. Can she do that? Can I win in small claims pro se?

The Buyers came back and wanted to salvage the deal after days of silence. I refused to do business with them, esp. since proof-of-funds was missing and I had lost other Buyers because of them. Fool me twice...

Attorney Answers 3

  1. As long as you were using a standard form Offer to Purchase form, the Offer became binding when the parties signed the Offer and the $1000 was provided as consideration. As the buyers had no contingencies, they were bound by the Offer to Purchase and if they failed to perform, the amount they risked forfeiting was the $1000. If the buyers signed the Offer that did not mention a broker fee split, then there should be no broker fee split. That is why it was important for the buyers to have an attorney review the document to make sure that it contained all of the terms of the deal. As for the broker, based on your facts here, what should happen to the deposit was in dispute and a broker should never release monies held in escrow without a document signed by the parties releasing the deposit. If the broker releases that money without a signed written document, the broker has exposed him/her to being liable for the $1000.

    Legally speaking, you have a good case. Practically speaking, it is going to cost you more than $1000 to resolve the issue. As the buyer did not sign the P&S and provide any additional funds, you are not entitled to anything more than the $1000. It would probably be best to let the buyer, who wasn't seriously interested, walk and find another broker who better understands the role of holding funds held in escrow.

    The content of this answer should not be relied upon or used as a subsitute for consultation with professional advisors and it should be clearly understood that no attorney-client privilege has been created. A more complete answer and/or more accurate answer can only be provided in a more thorough examination of the facts in a consultation with my firm.

  2. I assume that you used the standard form. If so, the $1000.00 should not have been released but held in dispute. It was the broker's responsibility to hold the deposit and the "meeting of the minds" issue is not at issue if the broker's fee was not in the offer. You have several options. First, allow the buyer to walk with his/her deposit. Second, you can sue for the deposit and related expenses (attorney's fees in your question. If you sue and are successful, the court will award court costs). Finally, you can negotiate with the attorney for the return of part of the deposit. Given the circumstances and the small amount of money, you should try to settle.

    No answer provided by this attorney in this forum is to be considered legal advice. No attorney-client relationship is created in responding to this question, and advice provided is based solely on very limited facts presented, and therefore may not be correct. You are advised that it is always best to contact a competent and experienced with the practice of law in the county in which you reside.

  3. In MA, an offer to purchase is generally not valid and binding unless it contains price, certain closing date, property description and brokers fee. Since there was no apparent agreement on brokers fee a subsequent writing will be required - a p&s to have a binding agreement. Therefore unless there is some agreement on the fee it would be tough to say u have a binding Agreement. U would need to show some other intent of the parties evidence that would show whether a binding agreement is present. Also. The intent to sign a subsequent agreement here a ps creates a presumption the parties never intended to be bound by the first agreement

    This response is only general and preliminary in nature and is not intended to serve as any legal undertaking, representation or advice until all facts are disclosed and representation is formalized.

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