Will I lose the entire downpayment amount if I walked away now?

[Chuckanut]

+1 on the lawyer.

With $250,000 at risk, I would spend a few hundred more and talk to a real estate lawyer. Bring all sale documents you signed.

 

[skipro33]

OP needs to hire a lawyer to represent him in this transaction and explain his rights and responsibilities.

I know this might be unusual, but given that the OP is new to home buying and under stress, it would be money well spent.

I agree; he needs to know the facts of this transaction and if it's in his best interests to proceed before handing over a quarter million dollars.
The purpose of the new California law; that the realtor was under contract to represent their buyer, buyer, and in a fiduciary capacity. Buyers' agents must have written agreements with their clients that outline the services and their cost. Additionally, starting August 13, 2024, home shoppers in most of California will need to sign contracts with agents to view properties, and they'll be responsible for paying their own commissions if the seller doesn't cover them. OP needs to first discover if their realtor is representing him under contract according to law and if not, then seek out legal representation to sue for that breech of contract.
I hope the OP ends up with the solution that he desires, but for me, when things don't move along smoothly and to my advantage, to where I'm questioning the actions of those who were hired and being paid to represent my interests in a matter, I back off until things change.

 

[cathy63]

Cathy, can you confirm is a builder in California can keep 250K - the potential buyer's downpayment + earnest money deposit? I mean, I understand they kept the property out of the market for a few weeks but how does that entitle them to anything over earnest money?

Or is the escrow agent messing with my head?

I really don't know. It depends what the contract says. I have never heard of a seller keeping the entire down payment, and I wouldn't think California has any especially seller-friendly laws since it's known to be more consumer-friendly and labor-friendly than most other states.

My experience with selling a condo last year was that when the deal fell through at the last second due to a tax lien against the buyer being found in the final background check, the buyer got all his money back, even the earnest money. He had a financing contingency though, and once financing was denied, that was it.

 

[MichaelB]

I hope the OP ends up with the solution that he desires, but for me, when things don't move along smoothly and to my advantage, to where I'm questioning the actions of those who were hired and being paid to represent my interests in a matter, I back off until things change.

+1

I had a situation similar to OP, with issues arising during the sale and still open prior to closing. I ended upon the hook for about $7k of damage in the house that was either not repaired or hidden.

The money a buyer brings to the table is the only leverage there is. Once it is paid the buyer has no recourse and no leverage.

 

[Gumby]

Money talks. Once you hand over the money, you have no leverage. I would advise consulting a real estate lawyer before proceeding further.

 

[DJRR]

New construction vs. existing home are different. There is no contingency for inspections per se, but there is a contract with the builder that includes certain requirements. They have to meet code, have to provide the finishes contracted, etc. There is typically a pre dry wall inspection to review before they close up, a coming up on settlement inspection, a pre settlement day of/before inspection, and a 1 year warranty. If you are not versed in construction it is advisable to bring an expert to represent you in reviewing the work. Things that look terrible are often not, and things that look fine are often incorrect.

Real Estate is very State specific, which is why people recommend a lawyer if you are worried. When I signed my contract in VA I had to provide a 20% down payment within a week of signing. If I did not meet my obligation under the contract I would forfeit the down payment. They also have obligations, but the contract is written to favor them. For ex. they promise a 4 month delivery, but if you read the contingencies in the contract they can actually be a year+ late without violating their contract. Reality is that well known builders want to sell houses and the cost of repairs are usually on their subcontractors so they can be your advocate to make sure the work is done correctly. A nice 6 pack to the site foreman can go a long way If things blow up then your money is going to be tied up for a long time until the arbitrator or courts decide if the contract terms are enforceable or who was at fault.

For your agent, if they have a broker, you need to complain to the broker and get a resolution. No agent should be paid for doing nothing. Even in new construction they should be guiding you through the process. If your agent is the broker then you need to complain to the state board that licenses the broker. That behavior is not acceptable.

My guess is that you will be fine if you can get an experienced person to help you navigate the process. Thousands of homes have been built and it is a known process. That is what the agent should have done and I am sorry that they failed in their responsibility.

 

[marinauser]

And the reason the escrow agent wants the check 10 days before closing is to make sure that it clears before the closing. Too many cashiers checks have been forged over the years. You might ask about wiring the money if that would push it closer to closing. I have often seen where on new construction, punch lists are not completely finished until after closing and even weeks after closing and move in.

 

[Irishgirlyc58]

Unless it’s changed and I’m 99% certain it hasn’t there is no such thing as “hidden repairs” in California. Repairs must be disclosed and if not disclosed but should be obvious to the seller then the buyer can sue for damages.
I know someone who did not disclose a repair issue with her house and the buyer took her to court- court said pay up buyer because you should have known about this obvious problem.
I got a real chuckle about that outcome.

 

[CardsFan]

Late to the party, but my 2 cents:

There is NO excuse for an absent realtor. Either that person, or someone from the office, should be walking you through every step. I don't know CA law, or what the new procedures entail, but if you walked in to a model, and bought with the realtor on duty, he may actually be working for the builder. It's legal, at least it was in MO a few years ago, and the builder probably has a license. They still owe you the attention you deserve.

I would look at the wire transfer instead of check. No way I would give them a check for that amount 10 days prior to closing.

Demand a meeting with the builder to go over what will be done to correct deficiencies, and what you warrantee covers. Have then show you in the contract where it says that (and it may very well be covered).

You should not need a lawyer for this, but it might be the best step to help put your mind at ease.

As far as the down payment, if you pay by check, that money should be held in escrow until closing. If there is no closing, you SHOULD get it back, but I would not take that chance.

Good luck. Odds are high everything is going to go fine.

 

[Aerides]

Op needs a real estate attorney, as has been suggested in several earlier threads.

 

[Irishgirlyc58]

Unless it’s changed and I’m 99% certain it hasn’t there is no such thing as “hidden repairs” in California. Repairs must be disclosed and if not disclosed but should be obvious to the seller then the buyer can sue for damages.
I know someone who did not disclose a repair issue with her house and the buyer took her to court- court said pay up buyer because you should have known about this obvious problem.
I got a real chuckle about that outcome.

Replace buyer with seller!
The seller had to pay.

 

[freedomatlast]

I wouldn't waste any money on a lawyer or spend anymore time even thinking about this house. I'd walk away before putting one cent into that deal. Saying they can keep $250,000 is a scare tactic designed to get you to bend to their will. Disingenuous at best. And if it actually does say that in writing somewhere, that's even more reason to walk away.

 

[Gremlin]

Replace buyer with seller!
The seller had to pay.

Haha! That makes more sense.

 

[Texas Proud]

One thought comes to mind... get a side agreement and have the builder put money into an escrow account that would cover ALL repairs and have it go to you if all are not done in say 30/60/90 day... whatever you agree... that means they will want to fix it to get that money OR that you get enough money to fix it yourself (or pocket it if the problem is not that bad)...

 

[Finance Dave]

"OP needs to hire a lawyer to represent him in this transaction and explain his rights and responsibilities.

I know this might be unusual, but given that the OP is new to home buying and under stress, it would be money well spent."

I agree with this. I was a licensed home inspector for 7 years (Indiana), and our reporting always categorized findings into areas like "Major Concern", "Safety Issue", "Repair", etc...which helps the buyer know how expensive and/or critical each finding is.

It sounds like you needed a better contract on the front end to protect you...maybe getting an attorney involved now would save you a lot of stress and maybe $$.

 

[calmloki]

Cathy, can you confirm is a builder in California can keep 250K - the potential buyer's downpayment + earnest money deposit? I mean, I understand they kept the property out of the market for a few weeks but how does that entitle them to anything over earnest money?

Or is the escrow agent messing with my head?

The items are NOT cosmetic. They are open wires (live or not) near the main water control, lack of proper insulation in the attic and a majorly damaged front porch pillar (may not be weight bearing but is unbelievable they thought they could sell it with obviously eye sore damage).

May be a tracer wire, normally green insulation, single conductor. Laid in the trench with the main incoming water line and just wrapped neatly around the water pipe (or not) where the water pipe comes out of the ground by the house. No termination box. In use a signaling device gets clipped on and the tracer wire and water line can be pretty exactly located so one can avoid hitting it if digging in the future. The other stuff like holes in the stucco I'd be pissy about.

 

[Brat]

Get a lawyer NOW. Bring your contract and the inspector's report. Follow the lawyer's advice.

 

[Trailwalker]

Get a lawyer NOW. Bring your contract and the inspector's report. Follow the lawyer's advice.

Agree. And not just any lawyer--someone experienced in real estate transactions. Talk to friends and family for a referral. The state bar association is also a place that may point you in the right direction.

 

[MC Rider]

Bring lawyers guns and money.

 

[Safire]

Hi Everyone, many thanks for all your advice. I did get an attorney specializing in real estate matters involved. The inspector says they did fix all but one issue but today the seller's agent texted me a photo to say the attic insulation "has been fixed". I am not sure what it is I am looking here as I've always lived in apartments - can you let me know if this is adequate insulation for an attic, please?

Thanks!

 

[Brat]

Ask your inspector.

 

[Safire]

Ask your inspector.

I did and his response was non-committal & all Greek and Latin to me which is why I asked here. This is what he texted me back to my inquiry as to his opinion on the photo here:

"Well, the insulation was missing before but is present now. Typically, it is loose and covering the scuttle board. It really depends on how carefully the scuttle is installed when a person exits the attic"

 

[Texas Proud]

Picture does not show anything IMO... but I am not even close to an expert on this...

The first thing to do is find out what was wrong in the first place... IOW, was there no insulation? If so, it is fixed if you now have insulation... if it was something else... maybe not..

 

[MarieIG]

I did and his response was non-committal & all Greek and Latin to me which is why I asked here. This is what he texted me back to my inquiry as to his opinion on the photo here:

"Well, the insulation was missing before but is present now. Typically, it is loose and covering the scuttle board. It really depends on how carefully the scuttle is installed when a person exits the attic"

Shouldn't your inspector go back to the house and actually "inspect" the work that has been done?

Depending upon the wording with your agreement with the inspector (if any) you may have to pay him for the additional time / follow up, and if more work is needed you should get that in writing and provide it to your attorney.

 

[Aerides]

Shouldn't your inspector go back to the house and actually "inspect" the work that has been done?

Depending upon the wording with your agreement with the inspector (if any) you may have to pay him for the additional time / follow up, and if more work is needed you should get that in writing and provide it to your attorney.

exactly. Reinspect.