However, your hypothetical is seriously off the mark in regards to new construction. Specifically, EVERY developer requires 5% of the purchase price in earnest money, not just 1%. Moreover, the majority of the new construction condos are “high end” and thus usually cost more than $300k. Of the perhaps 30 people with whom I have spoken who want out of the contract, only two or three had earnest money deposits less than $20k.

So, in reality, buyers must decide whether to fight over a sum usually in excess of $20k. If you can find an attorney to take the matter on a contingency basis, it makes sense to invest some funds in an effort to get some or all of the money back.

Why not treat the earnest money more like an option at least from the buyer’s perspective. You’ve made and offer, its accepted and lets treat your $3000 as an option to purchase rather then an obligation to purchase. A lot can happen between now and when the project is completed however you have tied up a unit for $3000 and if it turns out its the right decision for you then then lets complete. If not then walk away. In all likelihood if the market continues the way it has in the last couple of years you’ll be able to walk away and turn around and buy it for a lower price anyway.

That said, we’re arguing largely over semantics…

Johnnie Cochran was hired by OJ Simpson. Johnnie Cochran served his client until the end which was the conclusion of trial. I assume he did not condone the acts that were committed by his client but none-the-less he fulfilled his duty.

I turn down many clients and also accept many. When I enter into a Buyers Agency agreement I agree to serve my client and place their needs above all others. This is how I do business and I also choose to terminate my Buyer Agency agreements.

The earnest money is my clients committment to purchase. If “life circumstances” occur I fight for my clients earnest money refund to the best of my ability. I offer my opinion when warranted but still serve my clients needs until close of transaction or termination of agreement by either party.

If fraud or deceipt is detected by myself I immediately terminate the agreement as you would. We just differ in our opinions of practice.

Your answer was: “Good Luck…………..I tend to advise clients “C” and get letters from Lenders indicating you cannot close based on current income.”

I’m sure you didn’t mean that the way it sounds.

You also said: “Your term “obvious” is in error. What is “obvious” to one person is NOT to another”

For professionals that is not the case when the language is clear and provided in the contract.

Still, I think attorneys are given the authority to move in different ways than an agent. Craig would know better than I, of course, but I’m pretty sure that is the case.

Ray,

If there is no reason why the seller should ever keep your client’s Earnest Money, what IS Earnest Money to you? Why do you collect it from your clients and give it to the seller? You don’t have to. There’s nothing to say that the buyer HAS TO give Earnest Money. But if you don’t know when it is the seller’s “right” to keep it under the contract provisions, that would make it difficult for you to explain the risks against the Earnest Money to your client, if you feel there are none.

Is it unethical for a new construction buyer to seek a legal basis for getting out of the contract with a full return of the earnest money?

My answer is absolutely not…………If my Buyer changes his/her mind I will personally seek to retrieve their earnest money back FOR ANY REASON. If I’m unsuccessful in arbitration then I will advise the client that I have done everything within my power. I was hired by my client to represent them, not push a transaction to close.

Life happens and although I may not agree with WHY my client wants out, I was still hired by them. My obligation is and always will be to my client. I think you are quite misdirected and again illustrating why real estate (the way it is practiced) is fundamentally flawed.

When the golden carrot is achieved by closing a transaction, interests of the agents always trump that of their clients.

I strongly disagree. Under no circumstances are you to tell your client to lie and/or call the lender to come up with a bogus mortgage denial.

NO, NOT, NEVER.

That is not within the authority given you by your real estate license.

There is a right and wrong in every contract, depending on the agreements made in that contract.

It is wrong for a seller to try to keep a Buyer’s Earnest Money when they want to cancel for a legal out. If the contract says the buyer has the right to cancel on the home inspection by Friday, and they cancel on Thursday, it would not be right for the seller to try to keep their Earnest Money. It doesn’t matter if my client is the seller and they WANT to keep the money in that situation. The buyer has the right to walk and take their Earnest Money with them.

You and I have every obligation to assist our clients within the contract provisions. Outside of the contract provisions, they need an attorney.

What happens if you help your client lie and say they can’t get a mortgage (C in your example) and then they turn around and buy a different property with you?

I would never hire someone who would lie FOR me to get something FOR me, because that means they would lie TO me to get something for themselves. I won’t work with a seller who wants to lie to a buyer. I won’t work with a buyer who wants to lie to a seller. Anyone who can stand in a room and help someone lie to win…is not trustworty. (In my opinion, of course.)