Procedure determines who gets deposit

MAILBAG

April 17, 2005

I would like to know who to contact if a buyer signed a contract to purchase my home and gave an earnest money deposit of $1,000 to the agent and the buyer failed to close on the property for unknown reasons (I have the documentation that he was approved for the loan). I would like the deposit released to me and I have been in contact with the agent who has sent a certified letter with a Release of Obligation (returned receipt) to the buyer. The buyer has not responded.

I sent a letter with all documentation to the Maryland Real Estate Commission but their response was that they have no jurisdiction in this type of complaint.

If you could help me in this matter it would be greatly appreciated. I do not know where to go next.

Where one of the parties fails to complete a real estate transaction, the real estate broker often holds a contract deposit in its trust account. A new law, effective Oct. 1, 2004, allows a broker, at its discretion, to distribute the deposit to one of the parties. Here's the procedure:

Prior to distributing the deposit, the real estate broker must notify both the buyer and seller in writing that the broker intends to distribute the deposit money to the person who, in the good-faith opinion of the real estate broker, is entitled to receive the deposit in accordance with the terms of the real estate contract which established the deposit.

The broker's notice must disclose that either the buyer or seller may prevent distribution of the deposit money by submitting a protest within 30 days from the date the notice was delivered or mailed by the real estate broker; and that if neither party submits a protest within the 30-day period, the deposit money will be distributed in accordance with the broker's notice. This notice must be hand-delivered to the buyer and seller, or sent by certified mail, return receipt requested, and regular mail to both of the parties.

The buyer or seller has a right to deliver, in the same manner, a written protest to the real estate broker within 30 days from the date of the broker's notice.

If a protest is received by the real estate broker, the broker must continue to hold the deposit until the buyer and seller agree on how to distribute it; or until a court decides which of the parties is entitled to the deposit.

If no protest is received by the broker, it shall distribute the deposit in accordance with its notice to the buyer and seller.

In your situation, you should request the real estate broker holding the deposit to send a notice stating that the broker will pay the deposit to you because, in the good-faith opinion of the broker, you are entitled to it under the terms of the real estate contract since the buyer failed to complete the transaction.

If the broker declines to use this procedure, you should file a small-claims action in District Court against the buyer, and ask the court to award the deposit money to you. The real estate broker holding the deposit may be joined as a party-defendant to this action, so it will be bound by the court's judgment.

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