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.
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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.
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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
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