Is seller required to release escrow funds with loan denial?
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Is seller required to release escrow funds with loan denial?
The seller agreed to extend the closing date by 30 days. On the 3rd day I received a denial letter from the mortgage company. Due to someone commiting fraud and using my SSN to file a tax return. I notified the agent and seller and provided the denial letter. The house was sold 2 weeks after I moved out leased until cosing for 5 k more than my offer. Without mediation they filed a suit for 14K in damages. How can the sellers say they have damages when they received fair market rent and more for the house than my contract. We also did 5k in repairs and improvements. We were ordered by the judge to go to mediation. What should I do?
Asked on September 7, 2016 under Real Estate Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
It's not a matter of whether the seller has "damages" or not--it's that the deposit is legally the seller's to keep if the buyer breaches the contract by not closing. And the buyer is in breach if he cannot close for *any* reason which is not the seller's fault--so even if the reason for failure to close is identity theft, that is still a breach of contract, which allows the seller to keep the escrowed funds.
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