Ten Days, One Late Email, and $10,000 in the Middle
Nadia represents buyer Theo on a $310,000 Boise house. Theo signs the offer Friday, March 1, and mails $10,000 in earnest money to the listing brokerage. The seller signs and Nadia's system delivers the fully executed contract to Theo on Monday, March 4 at 10:00 a.m. The contract counts calendar days from acceptance and says that if the last day falls on a weekend or legal holiday, the deadline moves to the next business day. The inspection contingency gives Theo "10 days after acceptance" to deliver written disapproval, or the earnest money becomes non-refundable. Theo's inspector finds knob-and-tube wiring and a failing sewer line on March 12. Theo emails written termination Friday, March 15 at 8:00 a.m. The seller refuses to sign a release and says the money is his. At signing, Nadia told Theo, "Don't worry - you always get your earnest money back."
1. Compute the inspection deadline. Was Theo's March 15 termination timely?
Read the worked answer
No. He was late, and late under either reading of the contract.
Primary calculation:
- Acceptance is effective when the buyer receives notice of the seller's acceptance - Monday, March 4. Theo signing first is an offer, not acceptance.
- Day 1 is Tuesday, March 5. Day 10 is Thursday, March 14.
- Nothing falls on a weekend, so no roll-forward applies. Theo's email went out March 15 - one day late.
Cross-check against the harsher reading:
- If the clock ran from March 1, day 10 would be Sunday, March 10, which rolls to Monday, March 11. Still too late.
Consequences:
- The disapproval was not delivered within the contingency period, so the inspection contingency did not terminate the contract. The earnest money is no longer protected by that contingency.
- The buyers' leverage now is practical, not legal: ask the seller to release voluntarily, renegotiate repairs, or perform. Theo should be told in writing that his termination is late and that his deposit is at risk.
- Nadia's files, emails, and delivery timestamps should be preserved immediately.
2. May the listing brokerage release the $10,000 to the seller now?
Read the worked answer
No. Disputed money stays put until the parties agree or a court orders it.
- The brokerage holds the deposit as a stakeholder, not as the seller's agent with a wallet. It cannot decide who is right, and it must not disburse on the seller's say-so.
- Standard practice under the Commission's trust-account rules: hold the funds in the trust account, keep the ledger clean, and send written notice to both parties describing the dispute, the amount, and the options.
- Release requires either a release and cancellation signed by all parties, or a court order.
- Options to present: the contract's dispute-resolution or mediation clause; a negotiated split; a civil suit by whichever party will not release; or interpleader, where the brokerage deposits the funds with the court and is discharged.
- Tell the seller's agent plainly that the deposit is not "his" until the paperwork makes it his.
3. What are the consequences of Nadia's statement that Theo "always gets the earnest money back," and what should she do now?
Read the worked answer
It is not a contract term, and that is exactly the problem.
- The written contract governs the contingency. A verbal assurance does not amend it, and the agent cannot orally modify a written agreement she has no authority to change.
- But the statement can be a misrepresentation and a false promise, which is both a license-discipline risk and an E&O claim. Nadia has arguably created a conflict between her client's interest and her own exposure.
- Immediate steps: correct the record in writing to Theo, spelling out the actual deadlines and where he stands; notify her designated broker and E&O carrier; preserve the emails, texts, and delivery records; do not backdate, alter, or "fix" any document.
- Do not advise Theo to sign anything that characterizes the deposit as forfeited without his own counsel. Advise him of the release, suit, and interpleader options and let him decide.
- Going forward, put every deadline in writing at acceptance, with the computed date, and never answer a contingency question with a reassurance.