Troubleshooter: Fight over escrow money

July 13, 2010 9:00:00 PM PDT
A Wake County couple says they were excited to buy their first home, however, they say their excitement quickly turned into months of frustrations when the deal fell through and the seller was nowhere to be found."Buying a house should be something that's happy and you know it wasn't happy; it scared me from buying another house after that," first-time homebuyer Brian Morgenroth said.

Morgenroth and his wife, Carla, say they were scared after their first deal fell through last summer. Their problems started when they put down their earnest money.

"So we put $2,000 down and if you're middle class and a first-time home buyer, it's hard to save up for that kind of money," Brian Morgenroth said.

But within a few days the Morgenroth's learned the bad news.

"They found there was a $100,000 tax lien on the house," Carla Morgenroth said. "We automatically wanted to terminate the agreement between the seller and us."

While the Morgenroth's signed the termination letter, the seller didn't. The seller's realtor says they made every effort to get in touch with the seller to sign the termination letter, but they say he would not sign off on it. With no signature, the Morgenroth's couldn't get their $2,000 back.

"Well it's hard earned money and at that point, I was eight months pregnant, the baby on the way," Carla Morgenroth said.

Even more frustrating, the seller's house sold to someone else.

"The house was sold, it was in foreclosure and they still held the money," Brian Morgenroth said. "They didn't have a house to sell, so I don't know why they kept the money."

It's state law that if both parties don't sign off, then the earnest money is turned over to the courts, which now means the Morgenroth's have to serve the seller papers to go to court.

"They were like 'If you don't have an address, then you can't get your money back," Brian Morgenroth said.

It took the couple months of research, but they eventually found the seller to get served and the Morgenroth's won in court after the seller was a no show. Now more than a year after putting the $2,000 in earnest money, the Morgenroth's are finally getting it back. They hope their frustrations help others in the market for a new home.

"I'm hoping that after all of this, maybe the law gets changed," Brian Morgenroth said. "I really, really hope that if the buyer guys into to something and something is stated in the contract that isn't true and you can't contact the seller for a certain amount of time, the buyer should get their money back."

The Morgenroth's say they are upset the law is not on their side, while it does state in the contract that both parties must sign off on the termination letter, they feel the seller violated the contract as he stated there were no liens on the property, which in this case there was a lien.

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