Is it legal for an escrow company to hold my earnest money (4,000) until I sign…

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Is it legal for an escrow company to hold my earnest money (4,000) until I sign a “hold harmless” agreement? I have already signed the C.A.R. Form CC, 4/06 agreeing to cancel the contract and escrow, along with the seller.

3 thoughts on “Is it legal for an escrow company to hold my earnest money (4,000) until I sign…”

  1. You have to look at the terms of your agreement with the escrow company. Absent any language on the subject, I would think they could not force you to sign such an agreement. They are holding the money in trust for you for your purchase of the property; since the contract to purchase has been voided, they should return your money within a reasonable period of time.

    Ask them what possible liability they think they might have so that such an agreement is necessary. As a practical matter, the fastest way to get your money back is to sign the agreement and then report them to the department of real estate.

    George Shers
    Law Offices of Georges H. Shers
    4170 Glenwood Terrace, Suite #1
    Union City, CA 94587

  2. This is an unusual demand; I’m immediately wondering if there is something unusual about this escrow that would cause the escrow company to be super-cautious? Is there a third party to the escrow? Is there an issue with the source of the funds they are holding, like maybe they were deposited into the escrow for your account, but by your parents, by a trust, by a corporation of which you are an officer?

    I’m not so sure I’d sign a hold harmless unless I had a cogent explanation from the escrow officer or the escrow company’s law department.

    Be sure you get a copy of anything you sign. Also, if it is really an “agreement,” it should also be signed on behalf of the party you’re holding harmless.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

  3. No. Contact me directly.

    OCEAN BEACH ASSOCIATES
    OCEAN BEACH ASSOCIATES
    2185 Sunset Cliffs Blvd.
    San Diego, CA 92107

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