The Inspection Email, the Counter, and the $5,000
A Missouri residential contract is dated March 4. It provides $5,000 earnest money to be deposited with Cardinal Title within three business days, a ten-day inspection period 'after acceptance,' a thirty-day financing contingency, and an April 30 closing. The buyer's inspector finds a cracked heat exchanger on March 12. On March 13 the buyer's agent emails the listing agent requesting a $4,000 repair credit 'per our phone conversation.' On March 20 the seller counters at $1,500. The buyer never signs the counter. On April 2 the lender issues a conditional approval requiring the buyer to bring $6,000 more to closing; the buyer texts 'we'll figure it out at closing.' On April 27 the buyer demands the earnest money back and the seller refuses. The title company calls the broker for instructions.
1. What is the status of the contract as of April 27, and was the inspection issue ever resolved?
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The original March 4 contract is the operative agreement. The inspection request was a proposal to modify, not a contract change. The seller's March 20 counter was a new offer that terminated the buyer's March 13 proposal; when the buyer never signed, nothing was agreed. Both proposals died.
That cuts both ways:
- The buyer did not get the $4,000 credit, and the seller did not get a signed release of the inspection contingency.
- The buyer's inspection right had a ten-day window measured from acceptance. Depending on the acceptance date, March 13 was likely inside the window, which preserved the buyer's ability to terminate - for that period only. Once the period ran without a written termination, the buyer's unilateral right to walk over the heat exchanger expired.
- The buyer's continued silence after March 20 is not acceptance of the $1,500. Silence is not assent.
So the buyer's April 27 demand rests on nothing in the contract. With the inspection window closed and no credit agreed, the buyer is now trying to use a repair issue that was contractually resolved by inaction. The conversation that must happen is about the financing contingency, not the furnace - and 'we'll figure it out at closing' does not satisfy a lender condition or extend a deadline.
2. The title company asks the broker whether to release the $5,000 to the buyer. What is the correct instruction and why?
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Do not release. Hold, and say so in writing.
The broker is a stakeholder, not a judge. Releasing earnest money to either party while the parties dispute entitlement exposes the broker and the escrow holder to a claim from the other side - and, if the funds were held by the broker rather than the title company, to a conversion or trust-account complaint.
The disciplined sequence:
- Confirm in writing who holds the funds and when they were deposited. If the broker held them and did not deposit within the contract's stated period, that is a separate problem to disclose, not to hide.
- Notify both parties in writing that a dispute exists, that the funds will not be disbursed without a signed mutual release or a court order, and that the broker will act on a written agreement signed by both.
- Give a deadline. If no release arrives, the customary path is interpleader - deposit the funds with a court and let it decide who is entitled. That is the safe harbor; a broker who 'splits the difference' or refunds the buyer to avoid conflict is buying peace with someone else's money.
- Keep the funds in the trust account untouched in the meantime. No offsets for commissions, no fees deducted.
Also separate the two questions: who gets the earnest money is decided by who breached, not by who asks first or who is louder. The broker's job is custody and process, not adjudication.
3. The buyer's agent argues that the March 13 email bound the seller to a $4,000 credit. Evaluate that argument and identify the risk to the buyer.
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The argument fails, for three reasons.
- No acceptance. Even assuming the email was a valid offer, the seller never accepted it - the seller countered at $1,500 instead. A counteroffer operates as a rejection.
- No signature by the party to be charged. A contract for the sale of land, and any modification of it, must be in writing and signed by the party against whom enforcement is sought. The seller never signed anything agreeing to $4,000.
- Electronic writings can count - but only when they are the agreement. Missouri recognizes electronic records and signatures, so an emailed modification is not automatically invalid. The problem is not the medium; it is that there was never a meeting of the minds to record. 'Per our phone conversation' is evidence of a discussion, not a term.
Risk to the buyer: she has been treating the repair issue as leverage while her real deadline - financing - ran out. If the buyer cannot close on April 30 because she cannot produce the extra $6,000, and she has no financing contingency extension in writing, she is in default. The seller's remedies include retaining the earnest money and, in an appropriate case, damages or specific performance.
Best available move now: stop litigating the furnace, get a written extension of the financing contingency and closing date signed by both parties, and negotiate the repair credit inside that extension. Every day spent arguing about a rejected counteroffer is a day the buyer loses the ability to cure.