Legal Question in Real Estate Law in California

Your question fails to mention a couple of possibly-important facts. Number one, was your mother entitled to the return of her earnest money deposit, or did she forfeit it? Often, there is a time lag while the escrow holder determines whether the deposit is returned or forfeited. Was a real-estate professional involved here, either for the buyer or the seller of the Arizona property? What do they say about the earnest money? Number two, if she was buying a house in Arizona, why wasn't the escrow in Arizona (and subject to Arizona laws) rather than in Irvine? I suppose it could be an escrow company operating interstate, but in my experience buying and selling Nevada properties from California, the escrow has always been local (in Nevada). So, your mother may have a jurisdiction problem.

We have an attorney on here, Timothy McCormick, who is a former vice president-law of a major escrow firm, and he'll probably answer this question sooner or later. You can consider him your most reliable source of suggestions here.

My suggestions would include waiting for the USPS to provide whatever information they can, and reviewing the Arizona deal documents to be sure the deposit money is refundable under the (undisclosed to us) circumstances. Then consider a small-claims suit for any losses, but choose the proper jurisdiction (Arizona or California) and name the right defendant(s) - the seller, the escrow company, or both, depending upon probable blame.

Your post is confusing, for some of the reasons set forth by Mr. Whipple. According to your post, your mother sold her home in California and bought a house in Arizona.

This is confusing for several reasons. First of all, normally the buyer makes the earnest money deposit, not the seller. If your mother was making the earnest money deposit for the house in Arizona, that would make sense, but it is not clear why you were using an escrow located in California, instead of Arizona.

Second, if she made the earnest money deposit for the purchase in Arizona, then that was deposited for the purchase. You have not set forth any facts to indicate that this purchase was cancelled. If the deal is to go through, the earnest money deposit remains in escrow and is applied to the purchase price and/ or closing costs.