{"id":127,"date":"2010-06-23T16:28:52","date_gmt":"2010-06-23T16:28:52","guid":{"rendered":"http:\/\/blog.topbev.com\/?p=127"},"modified":"2010-06-23T18:53:33","modified_gmt":"2010-06-23T18:53:33","slug":"disposition-of-offer-deposit-ending-buyer-and-seller-disputes-over-small-amounts-of-money","status":"publish","type":"post","link":"https:\/\/blog.topbev.com\/?p=127","title":{"rendered":"Disposition of Offer Deposit–Ending Buyer and Seller Disputes over Small Amounts of Money"},"content":{"rendered":"

I\u00a0have been\u00a0pleasantly surprised at the number of comments I received relative to the disposition of Purchase and Sale deposits, and the problems that many of you have experienced because of the uncertainty in what to do about the “Offer Deposit” so-called, normally $500 or $1,000, which is delivered to bind the Offer. See my post on Purchase and Sale Deposits in www.realtorsresourceblog.com<\/a><\/p>\n

In point of fact, the Seller changes his position once an Offer is accepted. In most cases, marketing efforts are sharply curtailed, and even if they continue, they are presented on a “back-up” basis which does not engender a lot of enthusiasm from prospective purchasers. So, there is a “price” involved in the Seller’s accepting an Offer, and that needs to be somehow recognized.<\/p>\n

For the Buyer, the accepted Offer is an opportunity to “get serious” about the property. The Buyer pays for an inspection, and often has his attorney look over the Condominium Documents and Condominium Information, if this transaction involves the purchase of a Condominium Unit. Well drafted Offers (future blogs will consider the status of Offers in Massachusetts) will give the Buyer many “outs” if the transaction does not go forward.<\/p>\n

What seems to be the problem is what you, as the realtor holding the Offer Deposit, must do with same if for some reason the deal does not go to signed Purchase and Sale Agreement status. The normal approach would be for the deposit to be returned,in full, to the Buyer if the Buyer decides not to proceed. Most realtors will require both the Seller and the Buyer to “sign off” on such return.<\/p>\n

Most realtors I have dealt with will NOT return the deposit unless and until a piece of paper, authorizing the Release of the Offer Deposit, with signatures of both Seller and Buyer,\u00a0is obtained. If it is not obtained, for whatever reason, the Offer Deposit goes into some form of purgatory in the realtor’s fiduciary account, never to see the light of day for either the Seller or the Buyer.<\/p>\n

Suppose the deal doesn’t go because the Buyer just “walks away” and cannot be located. Suppose the deal doesn’t go because the Seller is not comfortable with the Buyer’s reasons for not going forward, and, in effect wants to punish the Buyer for acting irreponsibly or arbitrarily. Haven’t we seen this happen in our practices?<\/p>\n

I have a suggested solution, which I would appreciate your feedback on. In my opinion, my approach champions some much needed reform in this area.<\/p>\n

My suggestion is\u00a0two-pronged:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1. No Request from the Buyer.If the Buyer does no request\u00a0 the Offer Deposit back, in or within thirty (30) days of the date of the Offer, the Offer Deposit, in full, shall be delivered to the Seller.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2. Request from the Buyer for Return of Offer Deposit. If the Buyer requests the Offer Deposit back within said\u00a0thirty (30) days, Eighty (80%) per cent of the Offer Deposit is returned, no questions asked. The remaining Twenty (20%) is delivered to the Seller to defray Seller’s costs for participating in the inspoection and delivering Condominium materials, if a Condominium Unit is the subjectof the sale.<\/p>\n

This set of provisions would be an inetgral part of the Offer to Purchase, thus agreed upon in advance. The 80\/20 split of the Offer Deposit is mechanical, but it ends disputes. Having the Buyer bear some responsibility for the work involved in getting to a signed Offer limits “tire kickers” who sign offers like eating popcorn. Serious Buyers may think twice before leaving $200 or $100 on the table. The transaction can “move on” without the weight of what to do with the Offer Deposit. Neither the Seller or Buyer can dispute the dispostion of the Offer Deposit. it is agreed upon beforehand, and is based on reason.<\/p>\n

I would be interested if my readers think a system like this could work. It would end endless headaches for our profession, and the need to go to Small Claims Court or other litigation for a relatively small amount of money.<\/p>\n

The Greater Boston Real Estate Offer Form and Purchase and Sale Form have not been amended for almost twenty years. Future posts will explore this situation and suggest some other needed\u00a0revisions. I truly believe that the proposed “automatic” Offer Deposit solution makes sense and should be included in a new Offer Form. Get me your responses to this idea through blog comments or emails to etopkins@topbev.com<\/a>. I promise to respond and keep this matter alive.<\/p>\n","protected":false},"excerpt":{"rendered":"

I\u00a0have been\u00a0pleasantly surprised at the number of comments I received relative to the disposition of Purchase and Sale deposits, and the problems that many of you have experienced because of the uncertainty in what to do about the “Offer Deposit” so-called, normally $500 or $1,000, which is delivered to bind the Offer. See my post … Continue reading Disposition of Offer Deposit–Ending Buyer and Seller Disputes over Small Amounts of Money<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[164,1],"tags":[54,51,52,53],"class_list":["post-127","post","type-post","status-publish","format-standard","hentry","category-litigationdisputes","category-uncategorized","tag-change-of-offer-form","tag-deposits","tag-disputes","tag-return-of-deposit"],"jetpack_featured_media_url":"","jetpack-related-posts":[{"id":132,"url":"https:\/\/blog.topbev.com\/?p=132","url_meta":{"origin":127,"position":0},"title":"Payment at Closing–A suggested “Ounce of Prevention” for Buyer’s Agents","date":"June 23, 2010","format":false,"excerpt":"Buyer's agency is a relatively recent phenomena in Massachusetts. While it has been my practice to pay the Buyer's Agent directly at closing, I am informed by Buyer's Agent clients and friends, that this is not always what transpires. Many times, the Buyer's Agent must wait for the Listing Agent\u2026","rel":"","context":"In "closing"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":289,"url":"https:\/\/blog.topbev.com\/?p=289","url_meta":{"origin":127,"position":1},"title":"The Liquidated Damage Provision in the Sales Agreement–Often misunderstood, more often a trap for the unwary","date":"July 2, 2010","format":false,"excerpt":"One of my pet peeves as a Massachusetts real estate attorney is the printed language in most standard purchase and sale agreements regarding liquidated damages. To paraphrase the legalese contained in the printed form \"if the Buyer defaults, the Seller may keep Buyer's deposit as liquidated damages unless the Seller\u2026","rel":"","context":"In \"deposits\"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":327,"url":"https:\/\/blog.topbev.com\/?p=327","url_meta":{"origin":127,"position":2},"title":"The Offer To Purchase–Massachusetts (and perhaps other) Realtors Should Make Extra Effort on this Important Document","date":"July 7, 2010","format":false,"excerpt":"In Massachusetts, where I practice as a real estate attorney, there is a two step process for most real estate purchases. Usually without the assistance of counsel, the parties enter into an Offer to Purchase (the \"OTP\"). There are some contingencies in the OTP, which generally center around a \"satisfactory\"\u2026","rel":"","context":"In \"offer provisions\"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":226,"url":"https:\/\/blog.topbev.com\/?p=226","url_meta":{"origin":127,"position":3},"title":"The AirConditoning System Only feeds the second floor–What to do when the pre-closing inspection reveals an issue that complicates closing","date":"June 29, 2010","format":false,"excerpt":"Recently, I conducted a residential closing on a property in a\u00a0high end suburb of Boston, The property was generally in great condition, but my client, the BUYER,\u00a0informed me\u00a0that the pre-closing inspection (not the inspection after the Offer, but the \"walk-through\") indicated that the air conditioning system in the home didn't\u2026","rel":"","context":"In "closing"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":389,"url":"https:\/\/blog.topbev.com\/?p=389","url_meta":{"origin":127,"position":4},"title":"Dealing with Home Inspection Results–Health, Safety and that old Stand-by “Bargaining Power”","date":"July 12, 2010","format":false,"excerpt":"In Massachusetts, we have a rather archaic practice regarding agreements for the purchase and sale of real estate. There is an Offer to Purchase (usually signed by both parties without the benefit of counsel). After the Offer is signed, there is an hiatus where the Buyer causes a home inspection\u2026","rel":"","context":"In \"buyers agent bargaining power\"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":138,"url":"https:\/\/blog.topbev.com\/?p=138","url_meta":{"origin":127,"position":5},"title":"Massachusetts Real Estate Transactions-A world of their own","date":"June 23, 2010","format":false,"excerpt":"I am frequently asked by out of state realtors and mortgage professionals about deals \"going into escrow\" or the work of the \"title company.\" Very few out of Massachusetts people are aware of the idiosyncrasies of Massachusetts real estate practice, which include the following: \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1. An Offer and then\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts\/127","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=127"}],"version-history":[{"count":6,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts\/127\/revisions"}],"predecessor-version":[{"id":664,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=\/wp\/v2\/posts\/127\/revisions\/664"}],"wp:attachment":[{"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=127"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.topbev.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}