Q: Colorado real estate contract. Timely terminated after inspection. Can attorney demand forfeit of earnest money?
We went under contract to buy a colorado house and paid $65,000 earnest money. Contract gave date of may 24th for inspection termination. We viewed the property on the 14th may, it was in terrible condition, much worse than we were led to believe. We immediately terminated the contract and requested our earnest money to be refunded. The contract specifically stated that if buyer timely terminated then they were entitled to earnest money refund. We were then contacted by a crazy attorney who seemed not to understand the contract. He was talking nonsense about faulty and defective IO's (inspection Objections) when we had not made any objections, we had simply terminated as per contract clause. Attorney was demanding we either proceed with the purchase or agree to forfeit our $65,000 earnest money. Contract has now lapsed and attorney is demanding mediation to sort out the earnest money dispute. Does he have any right to do this and is there any recourse to file a complaint against him?
A: You have a lot of money at risk here. Unfortunately, the answers to your question and your legal rights WRT demanding the return of your earnest money is dependant upon the specific language in the Buy/Sell Agreement the language you used in your termination. If you used the Colo Real Estate Div Buy/Sell Agreement and Notice to Terminate you should have the leverage. I recommend contacting an attorney ASAP to deal with the Seller's Attroney.