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Old 08-02-2016, 06:53 PM   #1
FlamesAddiction
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Hey, so I am having an issue here and was looking for some insight.

I am moving my family to Kingston this month and made an offer on a home. One of the conditions was that we could have a home inspection first and there was a clause in there saying that we could cancel the deal based on anything we didn't like in the inspection. To make a long story short, the home was full of deficiencies and the home inspector strongly recommended against buying the home (as did my realtor). The worst part was that they tried to hide water damage and lied about it until we provided evidence.

I did kind of feel sorry for them as apparently they way overpaid for the house 5 years ago and are being forced to relocate because they are in the military (the family is already apart because the home hasn't sold in 4 months). Even with the offer we gave, they would have been losing about $40k from what they paid.

Now they fired their realtor and have been totally refusing to sign the mutual release. He said they won't even answer their phones. We gave them a week to calm down hoping they would come to their senses, but now I think they just packed up and left.

We made a good faith down payment of $10k and I hate that it is just sitting there. My realtor said he hasn't had this happen in all his years of being in the business. Is it time to lawyer up? Are there any civil penalties for the sellers for refusing to sign a good faith deal?

It's annoying more than anything. We found another home and we used the same home inspector. He even offered to talk to them if we can find them.
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Old 08-02-2016, 07:20 PM   #2
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I would assume that you should be able to recover your deposit from the previous realtor/brokerage office. Your realtor/broker should probably be escalating this matter to the listing broker. Deposits are held in trust by the brokerage so they likely have the money and should be able to refund it.
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Old 08-02-2016, 07:33 PM   #3
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Quote:
Originally Posted by calgarygeologist View Post
I would assume that you should be able to recover your deposit from the previous realtor/brokerage office. Your realtor/broker should probably be escalating this matter to the listing broker. Deposits are held in trust by the brokerage so they likely have the money and should be able to refund it.
In this case the listing brokerage is the same as the one I am using. They said that they need a mutual release signed before they can release the money even though the deal is dead.

What makes it doubly painful for the seller is that the same realtor that sold them the house was the same one that now couldn't sell it for them. Not my problem though. At first my realtor was saying now to worry but not I can tell his tone has changed and he suggested that my real estate lawyer calls the sellers lawyer. He suspects that they are gambling on me needing the funds for another offer and I will come back to them. Not happening though.

I read that it can drag on without a mutual release.
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Old 08-02-2016, 07:51 PM   #4
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Don't deals usually die, become null, after a pretty short period of time if an agreement isn't signed by both parties? Again, it is my assumption that if an agreement isn't met and signed the deal should fall apart and you should get your deposit back fairly easily. Maybe I'm thinking things through in too simple of a manner though.
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Old 08-02-2016, 07:59 PM   #5
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Originally Posted by calgarygeologist View Post
Don't deals usually die, become null, after a pretty short period of time if an agreement isn't signed by both parties? Again, it is my assumption that if an agreement isn't met and signed the deal should fall apart and you should get your deposit back fairly easily. Maybe I'm thinking things through in too simple of a manner though.
That's what I thought too but apparently not. If I knew what a know now I wouldn't have made such a big deposit. We had until yesterday to complete the deal so it's a dead deal. But the money sits in trust until they agree to release it even though we told them 2 weeks ago the inspection failed and we weren't buying. I suppose if they think I pulled out unfairly they could claim damages so the money sits in trust. I don't really understood to be honest. I just know it's been a while and the brokerage still can't cut me then cheque.
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Old 08-02-2016, 08:57 PM   #6
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I honestly can't think of a reason that you wouldn't get your money back.

The deal is dead on conditions, your deposit is to be returned to you. Thats just how it works. Your realtor should know what steps to take.
worry
To add. I understand that this is out of the ordinary, but your realtor should know how and where to escalate it. Deposits held in trust just don't disappear. There is pretty clear rules about the facilitation and handling of deposits in real estate transactions, so I wouldn't worry toooo much about it.

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Old 08-02-2016, 09:17 PM   #7
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https://www.thestar.com/life/homes/2..._collapse.html

According to this if the seller doesn't agree then court needs to order it. ��But it seems to be different in different jurisdictions.

From the article:


In most agreements of purchase and sale, the buyer gives the deposit to the seller’s brokerage to be held in trust. In any case, the deposit can only be released if one of three things happen:

1. The deal closes;

2. The buyer and seller sign a release agreeing where the deposit is to be paid; or

3. A court tells everyone what to do with the deposit.


Sometimes the deal is conditional on the buyer being satisfied by a home inspection and that the buyer has to tell the seller quickly that they aren’t happy. Yet, even if the buyer gives this notice, the brokerage cannot immediately give the deposit back. It needs a mutual release. Why? The seller might have an issue with how the home inspection was conducted. If the inspection wasn’t conducted in good faith, the seller can refuse to release the deposit. This is why it is important for buyers to take any home inspection seriously and use a professional company before attempting to cancel a deal.

For the record, I used a reputable home inspector. I certainly didn't enjoy forking out $400 for an inspection on a home I didn't end up buying. I was actually really sad because I like the house until then.
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Old 08-02-2016, 09:38 PM   #8
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The Seller being in the Military could complicate things too. I know up here one of the Real Estate companies has a negotiated rate to do all the listings for the Military. Those fees are part of the moving expenses the Military covers. So they (the realtor) might not want to upset a large client and are treading lightly.
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Old 08-03-2016, 09:58 AM   #9
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Surprised to hear about this "mutual release".

We just sold our place, but the first offer we got fell through due to the buyers not liking something in the home inspection (alum wiring)

All we got was a non-waiver form from the potential buyers which basically said they were not lifting the conditions and that they were bailing on the deal.

As the seller, we didn't have to sign anything and there was nothing we could do about it. I assume that after they sent the non-waiver they went to the brokerage and got their deposit back.

I don't think the seller has any power in this situation. Maybe the rules are different in Ontario?

Hope it all works out for you!
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Old 08-03-2016, 10:45 AM   #10
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Disclaimer: you are asking for legal advice in a public forum. I am not a lawyer but like to play one on tv :-)

Now that is out of the way.

http://www.reco.on.ca/failed-agreeme...hase-and-sale/
http://www.reco.on.ca/professionals-...ponsibilities/

The only reason the brokerage is holding the deposit and insisting on the release is because something is in question, I believe. Was the agreement for the deposit clear about under which conditions it would be returned under? i.e. clear and unambiguous: if the home inspection has anything in it not to our satisfaction the deposit has to be returned.
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Old 08-03-2016, 11:48 AM   #11
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I can only speak of how it is here and yes, as many have mentioned, a non waiver being sent in (only needs to be signed by the potential buyer) or a lapse of time on the condition date will kill the deal. The brokerage then re issues a cheque back to the buyer.

It is obviously different where you are and doesn't sound like the best model ... what if property B hits the market today but you can't write an offer because you tied up your liquid cash in property A and have to battle to get it back.
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Old 08-03-2016, 07:19 PM   #12
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As I recall in BC it's time limited, deal doesn't close after three months or whatever everyone gets everything back and life goes on, shouldn't need a court order as no money has changed hands, the whole point of escrow is keep things out of court.
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Old 08-03-2016, 07:42 PM   #13
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Quote:
Originally Posted by oilyfan View Post
Disclaimer: you are asking for legal advice in a public forum. I am not a lawyer but like to play one on tv :-)

Now that is out of the way.

http://www.reco.on.ca/failed-agreeme...hase-and-sale/
http://www.reco.on.ca/professionals-...ponsibilities/

The only reason the brokerage is holding the deposit and insisting on the release is because something is in question, I believe. Was the agreement for the deposit clear about under which conditions it would be returned under? i.e. clear and unambiguous: if the home inspection has anything in it not to our satisfaction the deposit has to be returned.
It was crystal clear that I could pull the offer if the home inspection was unsatisfactory for me for whatever reason. Both my realtor, the selling realtor (now former) and the owner of the brokerage told me the sellers are refusing to sign the mutual release just to be pricks basically. The only conceivable reason would be that they are hoping we need the money bad enough that we won't be able to buy a home without it, and if they delay long enough, we might make them another offer. They get no benefit from not signing the release. In fact, they aren't even allowed to accept another offer on their home while that money is sitting there according to the realtors.

The "mutual release" is there is the event that I pulled the offer without a valid reason. I think it's ridiculous that they should even have to sign it, but apparently that is the way it works here.

Anyway, I personally contacted their lawyer today and he said he will contact them and tell them that they have to sign or there can be penalties. He wasn't clear to me what they were, but he said he would sort it out with them.

I will let you know how it turns out.


Just if anyone is curious, here is a short list of some of the issues the home inspection revealed:

- Water damage in the basement. When confronted, they said the house never flooded in the 5 years that they were there, however there was also water damage on the bottom of some of their furniture. When we pointed this out, they admitted that there was a plumbing issue but it was fixed.

- A pile of stuffed animals was in the corner of the basement. When removed, the laminate flooring was damaged and smelled like cat pee.

- No water to the bath tub.

- Seized garage door motor.

- Deck was falling apart.

- The addition they built did not have proper drainage.

- Some outlets and switches in the house had no power going to them or had the polarity reversed.

- Really bad paint job (it was hard to tell during the viewing because they had really dim lights in the house, but once the inspector shined the flashlight on the walls, you could tell. In fact, they painted in such a hurry, they even painted over their motion detectors).

- Baseboards not nailed in place.

- Plumbing pipes that went nowhere. They were not believed to be rough-ins, but just the remnants of a DYI project.

- Holes in the wall behind furniture.

- Basement sink had sewer gas coming up (was not installed correctly)


I could go on and on. We actually called it early and just said no. There was no point in even getting the report.
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Old 08-04-2016, 08:25 AM   #14
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Oh, and worse of all, there was Oilers memorabilia all over the house!

And my lawyer called me and said their lawyer said the sellers acknowledged and will sign the papers.

I guess we will see.

So I take this is just an Ontario thing then? And just looking around the net, it sounds common in the States too.


As a side note, just talking to people around town, I guess buying form military people can be sketchy because a lot of them don't expect to stay long so they don't invest a lot of time or money into their properties. They just try to flip them for a profit with quick DYI work, plus they don't pay the realtor commission fees (government pays it because they are always on the move, although some private sectors could argue the same).
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Old 08-05-2016, 05:58 PM   #15
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Update:

My realtor got the agreement signed and I will have the money on Monday.

Their lawyer said that they were on vacation in Florida but they would sign it when they got back, and their new realtor said they were in Petawawa for the week and would "try to get to it". My realtor went and knocked on their door and they were actually at home and answered. They signed it and slammed the door..lol.

People can be such pricks.
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Old 08-09-2016, 08:15 AM   #16
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Quote:
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Update:

My realtor got the agreement signed and I will have the money on Monday.

Their lawyer said that they were on vacation in Florida but they would sign it when they got back, and their new realtor said they were in Petawawa for the week and would "try to get to it". My realtor went and knocked on their door and they were actually at home and answered. They signed it and slammed the door..lol.

People can be such pricks.
That's fataed. I'd love to hear why they thought they were in the right, because I guarantee you they thought they were. Stupid idiots.
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