Question #1
Question:
I accepted an offer for my house and escrow was opened. The buyer deposited his
$25,000 down payment into escrow and then, a week later, wanted to back out of the deal.
Now we're battling over the $25,000. I say I keep the down payment because he
chose to back out of the deal, leaving me in the lurch. He's demanding that the escrow
company give his money back. I've instructed the escrow company not to release the
money to him but I don't know what's going to happen. Can you give me a clue?
Answer:
If the escrow instructions do not clearly state what will happen in this situation, the
escrow company may "interplead" this case to court. That means that a
disinterested third party - the escrow company - wants to get out of the middle of this
dispute and turn it over to the courts. The escrow company likely will be released
from the case and a judge will decide whether the buyer or the seller should get the
disputed down payment.
This situation serves as a reminder of how important clear and complete escrow
instructions can be. If the instructions said clearly what should happen if the
buyer failed to perform and complete the deal, the escrow company could have followed
those instructions and released the money to the correct party without going to court.
Question
#2
Question:
I am a Realtor who recently sold a house for an agreed-upon 6 percent
commission. Without my knowledge, the seller submitted a supplemental escrow
instruction lowering my commission! Doesn't the escrow company have to pay my full
commission anyway? Can I sue the company?
Answer:
A Realtor or real estate broker is not a party to escrow, so you have no
legal interest in the escrow instructions. The seller is a legal party and the escrow
company had no choice but to follow the seller's instruction.
There is one exception to that. If an irrevocable assignment of the commission had been
placed into escrow, the seller would not have been able to submit a change to your
commission. You might want to consider this the next time you sell a house.
This is not to say that you do not have recourse. You do. The seller is liable
and can be sued in hopes of making him or her pay the full commission.
| 
