Legal Question in Real Estate Law in California

This is not an uncommon situation - frustrating - but not uncommon. The law is such that without a cancellation from both buyer and seller, agreeing as to how funds are to be disbursed, the escrow company can do nothing but hold the money in trust. Unless you can reach agreement with the Sellers as to the disposition of the money, it will unfortunately remain in trust until a Court orders the escrow company to release it. Can the Sellers balk and refuse to refund your money? Maybe, maybe not, but it is irrelevant whether they are right or wrong. Right or wrong, the only way you will get your money back is by agreement with them, or by suing them and having a judge order the money be refunded to you, or to the Seller, or split. Without a voluntary agreement, you have no choice but to file suit, and obtain a judgment instructing the escrow company as to how to handle the deposit. Read your contract carefully, as you may have agreed to binding arbitration, or another form of ADR, which might speed things up, but be prepared that you will have to retain a litigation attorney, and spend significant money to resolve this. The Sellers know that you will be forced to do so, and are probably hoping that you'll settle for 50% of your earnest money to avoid having to file suit and retain counsel.

Can the listing agent open escrow without approval from the second lender? The listing agent only sent the money and contract to escrow - he did not open the escrow. When you signed the Purchase Agreement (assuming it was a California Association of Realtors Residential Purchase Agreement and Joint Escrow Instructions - RPA-CA), you and the Seller mutually instructed the escrow company to open escrow. Further, I assume you signed additional escrow instructions, so the agent may not have done anything wrong. Contracts are very frequently formed for the sale of a residential property, and escrows opened without the short-sale being approved by one or both lendes. You will want to have a good real estate attorney review the contract to determine if there was any improper act on the part of the agent(s).

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