Sellers not responding to release of earnest money

My husband and I signed a 1 to 4 family resedintial contract with a private seller, no realtor involved. We had issues getting the appraisal completed because there weren’t any comparable sales in the area close by. The appraiser extended her search area and found enough to complete the appraisal. The contract date expired before we received the appraisal back, we did not sign an extension. The appraisal came back way under asking price and the same day we were also informed we would have to pay rollback taxes on the property that are over $6000. My husband and I informed the sellers we were terminating the sale due to low appraisal and rollback taxes. We have signed a release of earnest money form provided by the title company. The sellers will not respond to the form and will not answer the title company phone calls. We are not sure what the next step would be to get the earnest money back. I have read you can write a written demand letter to the sellers, I can’t seem to find any examples of demand letters to make sure I write it correctly.

Asked on May 18, 2017 under Real Estate Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

There is no special form for a demand letter: it is simply a letter setting out clearly that you want the money back and laying out *why* you are entilted to it back in this situation (e.g. appraising lower than asking; the taxes, and the seller's failure to disclose them). Send the letter some way you can prove delivery, like by certified mail.
Of course, the seller may refuse to repay the money: in that case, you would have sue the seller for its return. To win such a lawsuit, you would have to prove one or both of the following:
1) That under the terms of the contract, given the facts or situation, you were contractually entitled to a return of the money: that is, the seller must be violating the contract by not returning the money.
2) The seller committed fraud by not disclosing an important fact (the taxes) which were in fact known to the seller (if the seller did not know, the seller did nothing wrong and did not commit fraud).

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