Q: Is it legal for the selling Broker (escrow agents) to release the buyers deposit if seller refuses to sign cancellation?
Buyer & seller were disputing issues about removing TV mounts that r part of interior structure..buyers agent sent over 2 addendums 1)seller to remove, patch & paint. Or 2) cancellation & release of deposit...The Sellers, after I added some verbage to addendum felt comfortable signing to remove the mounts. Buyer was inpatient because he only had a few more hours & his inspection clause on an ASIS contract would be up so buyers agent sent another cancellation notice at the same time I was sending the buyers agent the addendum signed by sellers. Now sellers refuse to sign cancellation & release of buyers deposits. They feel that they complied to buyers demands so why should buyer want to cancel...Buyers Broker informed sellers broker that if sellers did not sign the cancellation that they had the legal right to release buyers deposit anyway.
A: From your question it is not clear who released the deposit to whom. It looks like Seller Broker had it but its not clear to whom it was released. Based on the question, it appears the funds should be returned to the Buyer.
The deposit should never be released without the signature of both the seller and buyer. The escrow holder is a fiduciary to BOTH parties and as such, can not make a decision on the disposition of disputed funds unilaterally. Either the parties must agree, or the escrow holder must seek instruction from a judge.
No grey areas on this one. The escrow holder was wrong.
No the ultimate end of all this is that if the inspection period was still in effect, the buyer had an absolute right to terminate the contract and the seller thinking it was waived was obviously wrong. So yes the broker was wrong but the deposit will end up in the Buyer's hands eventually.
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