Can I sue a property seller’s escrow company for illegally withholding earnest money?

UPDATED: Oct 1, 2022

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Can I sue a property seller’s escrow company for illegally withholding earnest money?

About a year ago, my parents were involved in a real estate transaction to

purchase a retirement home in Las Vegas. The deal did not go through and

the seller decided to withhold their earnest money? We had followed and met all of the purchase agreement timelines, but the seller was not willing to negotiate. We had no choice but to back out of the deal. The escrow company would not release my parents good faith earnest deposit. My parents were informed by the escrow company, that they could not refund their money unless the seller signed a release form. My parents asked for my assistance, and after looking into this I was informed that we needed to first go to mediation and then if necessary to court. We ended up going to both and ended up winning our court case. I feel that my parents are owed money for the pain and suffering caused by all of this. Their money was basically held in limbo for well over a year and there were many expenses traveling back and forth to Las Vegas to resolve all of this. Do we have a case against the seller or escrow company or both?

Asked on July 16, 2018 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The escrow company did not illegally withhold the money--they were following the law. They would have violated the law had they simply given it to your parents. Escrow cannot be released without either 1) the consent of both parties; or 2) a court order. They were doing what they were suppposed to do, and so you and your parents do not have a valid lawsuit against them.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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