Question: Dear Pat: I have followed your advice on handling estate sales as a successor trustee. Now I am facing a challenging situation that echoes these issues. We are selling our family home — managed by my brother, who is not local — and we have stumbled into a troubling predicament with two concurrent escrow accounts.
The home sale process happened faster than expected. The initial homebuyers missed their earnest money deadline, prompting our seller’s agent to cancel their contract hastily. To our surprise, the home resold quickly, involving a new escrow with a different title company, which seemed quite irregular.
Further complexities arose when the first homebuyers completed their earnest money deposit to the original escrow, coinciding with the second set of homebuyers fulfilling their deposit requirements. This overlapping of transactions is heading toward potential legal disputes, and the seller’s agent’s sales manager has now intervened.
Pat, I am seeking your guidance on navigating this tangled situation. What can we do to untangle this dual-escrow dilemma, ensuring a fair and legal outcome for everyone? Your insights would be invaluable in this confusing time.
Answer: The successor trustee must visit with a real estate attorney ASAP. The sooner, the better. As days turn to weeks, the more entrenched the competing homebuyers become. Full stop. Plus, the longer this dispute lingers, the higher the attorney fees.
Real estate agents make recommendations. Clients make decisions. The seller’s agent cannot unilaterally cancel a home sale. That is a fact. The successor trustee must have signed a cancellation of contract form. That signed form was emailed. My guess is that the first homebuyers did not sign the cancellation form.
If home sellers cancel a home sale, preferably after consulting a real estate attorney, providing the homebuyers are in default, it must be well executed. That was not the case. The seller’s agent, aka listing agent, hit the mistake trifecta. She should have consulted an in-house real estate attorney, her supervising sales manager or the free legal hotline with real estate attorneys at the California Association of Realtors. All detrimental facts.
The real estate attorneys representing homebuyers will produce emails and real estate paperwork. It will expose the truth. The timeline will demonstrate substandard paperwork. It gets worse. The seller’s agent will be caught writing, “You are out of contract.” (Meaning, she rendered a legal opinion, which is practicing law.)
An early resolution is paying one set of homebuyers to “go away.” It might work. If not, your real estate attorney might prove the first homebuyers were in default. Attorneys look for flaws in contracts. It could work. Regardless, all parties will have an attorney. So hire yours now.
Years ago, a sage Silicon Valley real estate attorney told me about these cases of home sellers entering two concurrent contracts for the sale of the property. He said, “It gets costly.” That’s because “they both want — that — house.” Adding, “And they don’t want to be roommates.”
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