Mending Fences – Deposit Dispute
By Monrovia Weekly
Published: Thursday, March 27th, 2008
Dear Margaret,
My wife and I were in escrow on a small duplex in Montebello. During our seventeen-day contingency period, we discovered a problem with the roof and decided to withdraw from the contract. We’ve been informed that the seller refuses to return our $10,000 deposit even though we were within our time period to cancel. Our agent has suggested mediation. What outcome might we expect?
Jeff in South Pasadena
Dear Jeff,
I cannot tell you what will happen in mediation because it’s completely up to the parties to reach a resolution.
As a mediator, I do not render a judgment, but instead my job is to facilitate open communication between you and the seller. Nevertheless, I may offer ideas or suggestions to help you find an agreeable solution, but there is no right answer. I have seen many different resolutions over the years.
For example, last month I held a mediation for the deposit dispute of a million-dollar apartment building. The buyers chose not to remove any contingencies to protect their $25,000 deposit. They were 30 days into escrow when they withdrew from the contract. However, even though they did not remove contingencies, the seller refused to return their money.
Both sides felt entitled to the entire deposit. The seller believed he had been damaged by the loss of critical marketing time, claiming that the buyers caused him a direct loss of property value. The buyers believed they could withdraw at any time and would automatically receive the full deposit. Unfortunately, some people don’t realize that escrow requires signatures from both sides before the deposit will be released to anyone. There is no automatic disbursement.
After much discussion, the buyers decided that getting some money now was better than the time and cost involved in fighting for more in arbitration. They accepted $15,000, the seller took $9,500 and the escrow received $500 for holding fees.
I cannot say what will happen in your case, however, mediation is a great place to start. You may be able to settle the matter, but if not, you always have the right to proceed to arbitration, or possibly, a court of law.
Margaret Garemore has been a realtor for over 10 years and an arbitrator and mediator for the last five. She owns her own company, Resolve It! Mediation. Send your questions to info@resolvemediation.com or call (626) 483-4611.
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