Earnest Money in a Failed Deal
Contact the SCR Legal Hotline (803-772-5206)(legal).
Keep your BIC and team in the know.
Who holds the earnest money in a failed closing? Lawyer or BIC?
If a lawyer holds the earnest money:
Ask that lawyer what is needed to disburse? SCR518? Mediation agreement? Other?
Upon taking the buyer’s money into the lawyer’s trust account, did that lawyer have the parties sign an escrow agreement that disburses in a failed closing? If yes, will that lawyer disburse upon the parties’ escrow agreement now that the deal has failed? If no, see above.
If a BIC holds the earnest money, then the following are possible actions:
1. The BIC securely holds the money in trust indefinitely until a proper judge or the parties sign proper disbursement documents (e.g., court order, SCR518, mediation agreement).
https://screaltors.org/wp-content/uploads/Forms/518.pdf
2. The parties hire trial lawyers to sue each other for breach of contract and/or the earnest money.
3. The parties hire a mediator to help the parties self settle via a mediation agreement.
https://screaltors.org/mediation/
4. If the earnest money is or less than $7,500, the BIC might voluntarily pay to sue the parties in a magistrate interpleader lawsuit as a BIC/plaintiff against the defendant parties regarding the earnest money.
5. If the earnest money is more than $7,500, the BIC might voluntarily pay a trial lawyer to sue the parties in a higher court interpleader lawsuit as a BIC/plaintiff against the defendant parties regarding the earnest money.
SC Bar Trial Lawyer Referral Service 800-868-2284 ($50 initial consult)(legal aid info)
Posted by: Byron King on 12/14/21 (This information is only accurate as of 12/14/21. You must contact SCR for updates and changes to this information after 12/14/21 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)
This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.