New construction: financing fell through, builder won't return deposit/earnest $

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sunny_socal
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New construction: financing fell through, builder won't return deposit/earnest $

Post by sunny_socal » Thu Jul 12, 2018 1:05 pm

Hi all,

We moved to a new state (CA to TX) and during our house hunting trip we signed a contract for a new construction home. It was 100% complete and ready for move in. We gave $1k in earnest money plus a $14k deposit. There was no home sale contingency but we verbally mentioned that we must rent out our CA home in order to qualify for a loan. The sales guy said "No problem" and "We're not in the business of keeping people's deposits, if your financing falls through you'll get it back." (I've since read online that this is a very common thing to say and that it doesn't amount to a hill of beans...)

This was about a month ago. Since then we've seen that our CA home is not going to rent as expected and our closing date on the new home could not be met. We filed a cancellation notice through our realtor, supported by a letter from our lender stating that our loan would not be approved. The lender didn't even respond, we didn't hear back for about a week. Finally we bugged the sales guy enough to make him talk to someone, he said we could only roll the money into another house but that they couldn't return it at this point. They claimed we had been 'approved' for financing based on the pre-approval letter we provided and thus the deal was final. (Initially we used their recommended lender but eventually switched to our own, but both lenders said we must have a rental agreement before a loan would be approved.)

What to do? I've called a local attorney recommended by our realtor but they haven't called back. I'll probably need to shop around more.

It's not a particularly convenient time for us to buy a home of any kind now that the original deal has fallen apart. We must move into a rental and there are penalties from pulling out of that too, at least for a first few months. Down the road I'm sure the CA home will rent out and we'll be in better shape to go home shopping again.

It seems these are the options:
[1] Do nothing and suffer the loss of $15k. Lesson learned. (Ugh, likely won't do this one)
[2] Keep pestering the builder and walk up the food chain until someone gets fed up and returns the funds. (currently trying this)
[3] Do as builder suggests and start a new deal with them. "Keep" the $15k. Still must wait for a renter in CA home and qualify for loan but the builder of course doesn't mind waiting.
[4] Find a lawyer, perhaps this is the only thing that will make the builder respond. But how much will this cost us? Will it burn a bridge with the builder?

We're calling and emailing the builder daily but they are completely unresponsive.

I include the relevant portions of the contract below:
Main financing contingency:
Image

Deposit details:
Image

These links for the hi-res versions:
https://i.imgur.com/Y1wLmCj.jpg
https://i.imgur.com/Y1wLmCj.jpg
Last edited by sunny_socal on Thu Sep 13, 2018 4:44 pm, edited 3 times in total.

SouthernCPA
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by SouthernCPA » Thu Jul 12, 2018 1:13 pm

The way that is worded, it looks to me like it's the seller's preference on if they want to return the deposit + earnest money or not. "Seller may, as Seller's option..."

You might be out of luck on this one.

z91
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by z91 » Thu Jul 12, 2018 1:16 pm

IMO pestering them won't do anything. This is a lot of dough and they know it. They are doing their best to keep it.

You have two options from my perspective:
1) Buy a house from them in the near future using said deposit money.
2) Get a lawyer.

I would personally get a lawyer to draft a letter and eventually take them to court. 14k should be small enough for them to pay back instead of dealing with the court process, but who knows.

Based on what you've said (and I know you know this, but don't want to hear it), it does look like you owe them the money, no matter what the salesperson said. There's likely verbiage in the contract itself that says the contract supersedes any verbal commitment made, and to refer to the contract language in case of any disputes.

CFR
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by CFR » Thu Jul 12, 2018 1:23 pm

Well, you could walk in front of the development with a big sign saying "XXXX kept my money". Talk to every person coming in to look at houses. Can't see how the builder could stop you. Crazy I know, but it is a significant amount of money and they intend on keeping it.

CFR

EDIT:
[4] Find a lawyer, perhaps this is the only thing that will make the builder respond. But how much will this cost us? Will it burn a bridge with the builder?
You care about burning bridges? You have got to be kidding. They just lit the fire and added gasoline. I wouldn't purchase anything from them, ever.

RickBoglehead
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by RickBoglehead » Thu Jul 12, 2018 1:28 pm

Tough lesson to learn that verbal isn't worth squat. Next time ask for an addendum stating very clearly the terms of return of the deposit.

Rupert
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Rupert » Thu Jul 12, 2018 1:36 pm

CFR wrote:
Thu Jul 12, 2018 1:23 pm
Well, you could walk in front of the development with a big sign saying "XXXX kept my money". Talk to every person coming in to look at houses. Can't see how the builder could stop you. Crazy I know, but it is a significant amount of money and they intend on keeping it.
So that the builder sues OP for tortious interference with his business or for defamation and libel? OP, get an attorney's opinion re whether the contractor is entitled to keep the money before you do anything else. There may be other provisions in that contract, which you haven't shown us, that are relevant. Most of the people giving you legal opinions here are not lawyers because lawyers won't give you a legal opinion in a forum like this. Just in general, if folks are interested in learning why an oral statement may not override the written terms of a contract, Google "statute of frauds."

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Pajamas
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Pajamas » Thu Jul 12, 2018 1:39 pm

sunny_socal wrote:
Thu Jul 12, 2018 1:05 pm
Since then we've seen that our existing home is not going to rent as expected
Why aren't you selling it instead?

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sunny_socal
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by sunny_socal » Thu Jul 12, 2018 1:44 pm

Pajamas wrote:
Thu Jul 12, 2018 1:39 pm
sunny_socal wrote:
Thu Jul 12, 2018 1:05 pm
Since then we've seen that our existing home is not going to rent as expected
Why aren't you selling it instead?
In-laws still live in CA, we may wish to return at some point

Jack FFR1846
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Jack FFR1846 » Thu Jul 12, 2018 1:44 pm

Sell the house. If it's not selling, it's because you've priced it too high. Price it appropriately and it's going to sell. Then get your house built. I don't see where the builder owes you a dime back.

Ok, you may wish to return to the home someday. Well, I'd like to buy a Lamborghini Aventador. If you return, buy another house.
Bogle: Smart Beta is stupid

totallystudly
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by totallystudly » Thu Jul 12, 2018 1:46 pm

Sue them now. Quit with this pansy letter writing stuff send them a court stamped summons and complaint. Then they have to consider if it is worth it to hire a lawyer and spend 20k to keep 15k. A letter to your state AG wouldn't hurt either.

furwut
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by furwut » Thu Jul 12, 2018 1:50 pm

I guess this is an example where paying a real estate lawyer up front to review the contract would have been worth it. An ounce of prevention ...

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greg24
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by greg24 » Thu Jul 12, 2018 1:53 pm

sunny_socal wrote:
Thu Jul 12, 2018 1:44 pm
In-laws still live in CA, we may wish to return at some point
Is that worth $15k to you?

furwut
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by furwut » Thu Jul 12, 2018 1:54 pm

totallystudly wrote:
Thu Jul 12, 2018 1:46 pm
Sue them now. Quit with this pansy letter writing stuff send them a court stamped summons and complaint. Then they have to consider if it is worth it to hire a lawyer and spend 20k to keep 15k. A letter to your state AG wouldn't hurt either.
And what if judgement is for the defendant plus attorney fees? I’d bet this contract is boiler plate, well tested, and nearly judgement proof. Don’t fight battles you can’t win.

Hug401k
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Hug401k » Thu Jul 12, 2018 1:56 pm

Personally, I'd do the lawyer ASAP and I'd also throw in a social medial approach. (maybe a statement of both coming first) Shocking how quickly companies respond to poor publicity. Plus, once you make it VERY public that they keep deposits even if financing falls through, they might feel a pinch on that.

denovo
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by denovo » Thu Jul 12, 2018 1:58 pm

sunny_socal wrote:
Thu Jul 12, 2018 1:05 pm
Hi all,

The sales guy said "No problem" and "We're not in the business of keeping people's deposits, if your financing falls through you'll get it back." (I've since read online that this is a very common thing to say and that it doesn't amount to a hill of beans...)

....We filed a cancellation notice through our realtor,

What to do? I've called a local attorney recommended by our realtor
So let me get this straight, your real estate agent didn't read through your contract and insist on putting any finance or other contingencies to protect your deposit? If you ask me, this person is worse than useless. I would file a complaint against your real estate agent and see if the broker will pay anything out to you because it seems to me like he failed in representing you. Why would anyone ever trust what a salesman has to say? I bet the contract you signed even has something about oral agreements being void.
"Don't trust everything you read on the Internet"- Abraham Lincoln

Random Poster
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Random Poster » Thu Jul 12, 2018 2:08 pm

There may be a conflict between the "seller may" language in financing paragraph and the last line in the commitment deposit paragraph, but--based on a very quick reading---the conflict does not appear to be in the buyer's favor. In that respect, I'm particularly interested in reading how the buyer intends to get around the wording in the last line of the commitment deposit paragraph.

ResearchMed
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by ResearchMed » Thu Jul 12, 2018 2:18 pm

RickBoglehead wrote:
Thu Jul 12, 2018 1:28 pm
Tough lesson to learn that verbal isn't worth squat. Next time ask for an addendum stating very clearly the terms of return of the deposit.
In many states, it is the law that verbal agreements are *not* valid for real estate transaction; ONLY written agreements are valid.

Don't know about California.

RM
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Raabe34
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Raabe34 » Thu Jul 12, 2018 2:25 pm

If I were in your shoes I would recognize that I signed a contract and did not perform and therefore forfeit the deposit.

denovo
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by denovo » Thu Jul 12, 2018 2:30 pm

Raabe34 wrote:
Thu Jul 12, 2018 2:25 pm
If I were in your shoes I would recognize that I signed a contract and did not perform and therefore forfeit the deposit.
Ya, and give up 15k. Sure....
"Don't trust everything you read on the Internet"- Abraham Lincoln

Mom 2 Groms
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Mom 2 Groms » Thu Jul 12, 2018 2:42 pm

I would take a different approach.

Since you're not ready to close on a house now, and you've paid a deposit, and you seem to like the product this builder is selling... I would enter into another contract to build a new home with them. If the construction hasn't started yet, it will take months to finish - maybe close to a year. You can then sign a rental agreement for the specified length of time, and then close on the house after construction is complete. The added bonus is that you get to pick everything out and there's no settling on finish selections.

However, get everything in writing this time and make sure you're comfortable with the terms.

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Pajamas
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Pajamas » Thu Jul 12, 2018 2:53 pm

Mom 2 Groms wrote:
Thu Jul 12, 2018 2:42 pm
I would take a different approach.

Since you're not ready to close on a house now, and you've paid a deposit, and you seem to like the product this builder is selling... I would enter into another contract to build a new home with them. If the construction hasn't started yet, it will take months to finish - maybe close to a year. You can then sign a rental agreement for the specified length of time, and then close on the house after construction is complete. The added bonus is that you get to pick everything out and there's no settling on finish selections.

However, get everything in writing this time and make sure you're comfortable with the terms.
That seems to be the best course of action for everyone involved.

There are real risks to being an accidental landlord and this is a good example of the problems that can result from it. Basically what the two lenders are saying is that even limited involvement in your overall proposed situation is too risky for them despite the fact that it's their business to lend money on property. That should really give you pause and make you question whether or not what you are planning is too risky for you, too. Sell your former house.

grkmec
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by grkmec » Thu Jul 12, 2018 2:56 pm

Expensive lesson. You should never assume a realtor - or lawyer for that matter - will have your best interests. You need to read every single word and understand exactly what you sign. Let me tell you what happened to me in June 2007...

I made an offer to buy a house for $2.13 million. I got pre-approved by Countrywide for a 80 / 10 / 10 loan -- meaning I would put down 10%. The builder wanted a 10% deposit in escrow so upon contract execution, so I had to wire 213k in cash. That was a lot of money, so read every damn word of the purchase and sale myself - many times over. The contract specified a mortgage contingency but the language in the contract fell away after I had formal approval from Countrywide. My lawyer advised me this was standard language and no big deal. I replied with something like "whatcha talkin' about willis ??!??"

Then kindly told him NO effing way am I signing that. I told said to him, riddle me this:

1) What happens if Countrywide renegs and doesn't close?
2) What happens if I lose my job between mortgage approval and closing?
3) What happens if I die between mortgage approval and closing?

His reply to #1 was, well that has never happened in my 20yrs blah blah blah. And if it did you would just find another bank. And to #2 and #3, he said, you wouldn't qualify for a loan at that point so you lose 213k. And my own lawyers thought I was nuts and was arguing with me. I finally told my own lawyer - who is paying you? Me or the builder? His reply was "you". So I told him, to shut the F-up and rewrite the language the way I wanted.

6 weeks later - August 2007 - front page of WSJ - Banks are re-negging on Jumbo loan commitments due financial crisis.

My lawyer called me and thought I was some kind of prophet.

Caveat Emptor

Raabe34
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Raabe34 » Thu Jul 12, 2018 3:53 pm

denovo wrote:
Thu Jul 12, 2018 2:30 pm
Raabe34 wrote:
Thu Jul 12, 2018 2:25 pm
If I were in your shoes I would recognize that I signed a contract and did not perform and therefore forfeit the deposit.
Ya, and give up 15k. Sure....
I"m shocked by a boglehead callousness for an agreement that someone signed in good faith. If the company had performed differently and not completed the home on time would you be allowing them to back out of it?

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sunny_socal
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by sunny_socal » Thu Jul 12, 2018 4:13 pm

Raabe34 wrote:
Thu Jul 12, 2018 3:53 pm
denovo wrote:
Thu Jul 12, 2018 2:30 pm
Raabe34 wrote:
Thu Jul 12, 2018 2:25 pm
If I were in your shoes I would recognize that I signed a contract and did not perform and therefore forfeit the deposit.
Ya, and give up 15k. Sure....
I"m shocked by a boglehead callousness for an agreement that someone signed in good faith. If the company had performed differently and not completed the home on time would you be allowing them to back out of it?
I don't interpret any callousness here. It's business on both sides: builder wants the money in their account, I want it in mine. When we get an even exchange, we're both happy. I think most people wouldn't be happy to leave this much money on the table and have _nothing_ to show for it.

We're exploring a new deal with the builder. Our CA rental manager is indicating that he'll have a signed lease within a day or two.

totallystudly
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by totallystudly » Thu Jul 12, 2018 10:33 pm

And what if judgement is for the defendant plus attorney fees? I’d bet this contract is boiler plate, well tested, and nearly judgement proof. Don’t fight battles you can’t win

That would depend on the language in the contract plus the marathon of actually winning. Boiler plate contracts are generally bad. Judgment proof refers to defendants that don't have assets and can't be collected from. I doubt it is well tested as most people rarely sue.

AZAttorney11
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by AZAttorney11 » Thu Jul 12, 2018 11:12 pm

totallystudly wrote:
Thu Jul 12, 2018 10:33 pm
And what if judgement is for the defendant plus attorney fees? I’d bet this contract is boiler plate, well tested, and nearly judgement proof. Don’t fight battles you can’t win

That would depend on the language in the contract plus the marathon of actually winning. Boiler plate contracts are generally bad. Judgment proof refers to defendants that don't have assets and can't be collected from. I doubt it is well tested as most people rarely sue.
How many cases have you tried? Ever hear of a motion for summary judgment? The above “advice” should be ignored and this is another example of non lawyers offering thoughts and opinions that could greatly damage the financial well being of forum members.

AZAttorney11
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by AZAttorney11 » Thu Jul 12, 2018 11:15 pm

totallystudly wrote:
Thu Jul 12, 2018 1:46 pm
Sue them now. Quit with this pansy letter writing stuff send them a court stamped summons and complaint. Then they have to consider if it is worth it to hire a lawyer and spend 20k to keep 15k. A letter to your state AG wouldn't hurt either.
What’s your theory as to why the OP has a legal claim against the counterparty to the contract? From the information the OP has provided, why do you believe filing a lawsuit will resolve this matter?

Nate79
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Nate79 » Thu Jul 12, 2018 11:26 pm

sunny_socal wrote:
Thu Jul 12, 2018 1:44 pm
Pajamas wrote:
Thu Jul 12, 2018 1:39 pm
sunny_socal wrote:
Thu Jul 12, 2018 1:05 pm
Since then we've seen that our existing home is not going to rent as expected
Why aren't you selling it instead?
In-laws still live in CA, we may wish to return at some point
Have you fully looked at the tax implications of maintaining a business presence in CA? You really want to rethink this idea and sell the property breaking all ties to CA.

totallystudly
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by totallystudly » Fri Jul 13, 2018 3:22 am

How many cases have you tried? Ever hear of a motion for summary judgment? The above “advice” should be ignored and this is another example of non lawyers offering thoughts and opinions that could greatly damage the financial well being of forum members
.

70+ cases filed. One appeal to a federal circuit plus oral argument. Ive also been a lead plaintiff in several class actions. Yes, I have heard of summary judgment and I have personally filed and successfully defended several.

How many class actions or federal lawsuits have you had? Any federal appeals work? You have anything constructive to say or do you just want to snipe from the treeline?
What’s your theory as to why the OP has a legal claim against the counterparty to the contract? From the information the OP has provided, why do you believe filing a lawsuit will resolve this matter?
There would be the taking of OPs money and their nonresponsiveness to any other sorts of communication or resolution. Lawsuits resolve conflicts, that's kinda the point.

What's your alternative? Hire some worthless lawyer to write them a strongly worded letter?

AZAttorney11
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by AZAttorney11 » Fri Jul 13, 2018 6:00 am

totallystudly wrote:
Fri Jul 13, 2018 3:22 am
How many cases have you tried? Ever hear of a motion for summary judgment? The above “advice” should be ignored and this is another example of non lawyers offering thoughts and opinions that could greatly damage the financial well being of forum members
.

70+ cases filed. One appeal to a federal circuit plus oral argument. Ive also been a lead plaintiff in several class actions. Yes, I have heard of summary judgment and I have personally filed and successfully defended several.

How many class actions or federal lawsuits have you had? Any federal appeals work? You have anything constructive to say or do you just want to snipe from the treeline?
What’s your theory as to why the OP has a legal claim against the counterparty to the contract? From the information the OP has provided, why do you believe filing a lawsuit will resolve this matter?
There would be the taking of OPs money and their nonresponsiveness to any other sorts of communication or resolution. Lawsuits resolve conflicts, that's kinda the point.

What's your alternative? Hire some worthless lawyer to write them a strongly worded letter?
The phrasing of your response makes me think all of that legal experience was gained as a pro se litigant. Is my suspicion correct?

totallystudly
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by totallystudly » Fri Jul 13, 2018 6:34 am

The phrasing of your response makes me think all of that legal experience was gained as a pro se litigant. Is my suspicion correct?
Clever Dodge of the questions asked and still not contributing to the thread.

Rupert
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Rupert » Fri Jul 13, 2018 7:25 am

totallystudly wrote:
Fri Jul 13, 2018 6:34 am
The phrasing of your response makes me think all of that legal experience was gained as a pro se litigant. Is my suspicion correct?
Clever Dodge of the questions asked and still not contributing to the thread.
If you're an attorney, have you read your state bar rules/advice re dispensing legal advice on internet forums? You do realize that by giving OP the very specific advice you have given him, you have arguably undertaken representation of OP, meaning he is arguably your client now, which means he could file a bar complaint against you and sue you for malpractice? Are you even licensed to practice in OP's jurisdiction? Surely you know about the rules re giving advice about the laws of a jurisdiction in which you're not licensed to practice?

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8foot7
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by 8foot7 » Fri Jul 13, 2018 7:46 am

What an amazing deterioration of this thread.

Rupert
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by Rupert » Fri Jul 13, 2018 7:48 am

8foot7 wrote:
Fri Jul 13, 2018 7:46 am
What an amazing deterioration of this thread.
Indeed.

stan1
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by stan1 » Fri Jul 13, 2018 8:02 am

sunny_socal wrote:
Thu Jul 12, 2018 4:13 pm
We're exploring a new deal with the builder. Our CA rental manager is indicating that he'll have a signed lease within a day or two.
Seems like the best approach to me. Quite a bit of bad advice on this thread.

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F150HD
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by F150HD » Fri Jul 13, 2018 8:41 am

thread is a bit confusing. Feel like there's missing information specifically in regard to OPs 'current' home and why its not renting (or why it wasn't renting). At first I thought OP was trying to sublease a rental they were in.

OP-If you have updates you should edit/put them in your FIRST POST so people don't read and throw up more posts 6 months after you've already moved.

"Snipe from the treeline"....lol

z91
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by z91 » Fri Jul 13, 2018 3:20 pm

stan1 wrote:
Fri Jul 13, 2018 8:02 am
sunny_socal wrote:
Thu Jul 12, 2018 4:13 pm
We're exploring a new deal with the builder. Our CA rental manager is indicating that he'll have a signed lease within a day or two.
Seems like the best approach to me. Quite a bit of bad advice on this thread.
Well, given OP said there is no expectation the place would rent, what advice would you expect? Now that he is able to rent it out, of course that's the "best approach." That's what OP's plan was to begin with..

SouthernCPA
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by SouthernCPA » Fri Jul 13, 2018 4:15 pm

AZAttorney11 wrote:
Fri Jul 13, 2018 6:00 am
totallystudly wrote:
Fri Jul 13, 2018 3:22 am
How many cases have you tried? Ever hear of a motion for summary judgment? The above “advice” should be ignored and this is another example of non lawyers offering thoughts and opinions that could greatly damage the financial well being of forum members
.

70+ cases filed. One appeal to a federal circuit plus oral argument. Ive also been a lead plaintiff in several class actions. Yes, I have heard of summary judgment and I have personally filed and successfully defended several.

How many class actions or federal lawsuits have you had? Any federal appeals work? You have anything constructive to say or do you just want to snipe from the treeline?
What’s your theory as to why the OP has a legal claim against the counterparty to the contract? From the information the OP has provided, why do you believe filing a lawsuit will resolve this matter?
There would be the taking of OPs money and their nonresponsiveness to any other sorts of communication or resolution. Lawsuits resolve conflicts, that's kinda the point.

What's your alternative? Hire some worthless lawyer to write them a strongly worded letter?
The phrasing of your response makes me think all of that legal experience was gained as a pro se litigant. Is my suspicion correct?
Wow. 70+ Cases filed by what appears to be a non-attorney...remind me never to do business with you, you sound very litigious.

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sunny_socal
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by sunny_socal » Tue Aug 28, 2018 4:23 pm

We tried to build a brand new home with the same builder in order to make use of the existing deposit. In the end we couldn't agree on a price and we ended up buying a pre-built home from a different builder.

I have since found a flat-fee attorney to do the following for $750:
- Review the contract
- Send a letter to the builder demanding our money back

I know I may be throwing good money after bad, but the attorney said builders often counter back with an offer after such a letter. It's not a lawsuit and there's little risk of losing any more. Fingers crossed!

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sunny_socal
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by sunny_socal » Thu Sep 13, 2018 4:09 pm

So, the gamble worked! The builder responded with "while we don't agree with all the circumstances we think it's best if all moved past this. The check is in the mail."

The letter from our lawyer threatened a suit if they didn't pay us back. (We had not actually retained the lawyer for anything beyond writing the letter.)

:mrgreen:

ResearchMed
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by ResearchMed » Thu Sep 13, 2018 4:21 pm

sunny_socal wrote:
Thu Sep 13, 2018 4:09 pm
So, the gamble worked! The builder responded with "while we don't agree with all the circumstances we think it's best if all moved past this. The check is in the mail."

The letter from our lawyer threatened a suit if they didn't pay us back. (We had not actually retained the lawyer for anything beyond writing the letter.)

:mrgreen:
Terrific!
I've often wondered if the "just a letter" strategy might work.
Good job.

But... you've also learned about "verbal agreements" in general.
Worse, in some jurisdictions, it is explicit that verbal agreements about real estate are NOT valid, only written agreements.
(But they are scumbags for stating that assurance at the start, as it was definitely misleading and intentionally so!)

RM
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denovo
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by denovo » Thu Sep 13, 2018 6:55 pm

sunny_socal wrote:
Thu Sep 13, 2018 4:09 pm
So, the gamble worked! The builder responded with "while we don't agree with all the circumstances we think it's best if all moved past this. The check is in the mail."

The letter from our lawyer threatened a suit if they didn't pay us back. (We had not actually retained the lawyer for anything beyond writing the letter.)

:mrgreen:
:sharebeer
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student
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by student » Thu Sep 13, 2018 7:05 pm

Congratulations.

staythecourse
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Re: New construction: financing fell through, builder won't return deposit/earnest $

Post by staythecourse » Thu Sep 13, 2018 8:00 pm

sunny_socal wrote:
Tue Aug 28, 2018 4:23 pm
We tried to build a brand new home with the same builder in order to make use of the existing deposit. In the end we couldn't agree on a price and we ended up buying a pre-built home from a different builder.

I have since found a flat-fee attorney to do the following for $750:
- Review the contract
- Send a letter to the builder demanding our money back

I know I may be throwing good money after bad, but the attorney said builders often counter back with an offer after such a letter. It's not a lawsuit and there's little risk of losing any more. Fingers crossed!
Congrats. I can't believe that old trick actually worked. If I was the builder I would have just tossed it in the trash. Even if you sue all you are going to get is the original money back anyways AFTER spending your own money to hire your own attorney. They really didn't have much to lose just throwing your letter away and waiting to get served (if ever).

Glad to see they may have actually cared about ending the situation that is fair to all involved.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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