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Q: I represent the sellers of a residential property which went under contract on October 1st. The closing date was December 1st. Per the contract, the buyer was to deliver an earnest money deposit to the settlement agent by October 6th.
On November 30th, we learned that the buyer was not going to be able to get financing. The financing contingency had expired prior to learning the buyer was denied financing. When we asked the settlement agent to deliver the EMD to the sellers for the buyer’s default, the settlement agent informed us the buyer never delivered the earnest money. What responsibilities did the buyer’s agent have in ensuring the earnest money was deposited?
A: Virginia Regulations state that “Failing to provide in a timely manner to all principals to the transaction written notice of any material changes to the transaction” constitutes improper delivery of instruments. (18 VAC 135-20-310.) When the buyer’s agent failed to notify the sellers and their agent that the buyer had not delivered the earnest money, the agent violated this regulation.
The agent also likely violated Article 2 of the Code of Ethics, which requires REALTORS® to avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or transaction.
Agents cannot force a buyer to deliver money, but if the buyer fails to do so, then the agent’s responsibility is to notify the sellers in writing that the money was not delivered.
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