In a recent transaction, the seller accepted the buyer’s offer but almost immediately the deal started falling apart. The Buyer’s address noted on the offer was located outside the United States. When the buyer’s earnest money deposit was due, he had every excuse as to why it was taking so long to send it.

The escrow officer sent wire instructions to the buyer multiple times to deposit the earnest money. In the end, the buyer sent a third-party cashier’s check that was in the amount of the full sales price.

Shortly after the escrow officer received and deposited the check, the buyer sent emails explaining why he could not go through with the purchase. The email addressed to the real estate agents and the escrow officer said:

I suppose it is still early morning over there, did you receive my previous email? Due to the devastating news of my failed travel plans, my wife and kids noticed that I was moody all day, hence the need to open up to them about the property purchase deal which was meant to be a surprise. Though she commended my drive towards investment plans, she however frowned at the fact that she was not carried along from the onset. Furthermore the travel agent explained how slim the chances of appealing the visa denial is, hence we gave up on the idea. At this time my wife and I have decided to put on hold/suspend the property purchase deal due to the fact that I was denied a visa and also as it concerns the ravaging global pandemic. The corona virus outbreak has created lots of fears and worries, such that even create lots of limitation regarding traveling. We have resolved to give a shot again at having a property in the USA by mid-next year, hoping that obtaining travel visas for my wife and I will be hitch-free. I sincerely hope the USA relaxes on her stiff immigration laws for prospective investors, even as we envisage a total eradication of the ongoing pandemic.

I have decided to stick to my wife’s counsel, to this end we have resolved that the earnest money payment funds be returned back to us in a bid to have it reinvested back home. If there are any fees/bills incurred by me during the process of putting up an offer do state it out and I will advise that it be deducted immediately. I will furniture you with wire transfer details on where the monies should be sent to.

I await your prompt update on this.

Regards,
Billy Buyer

The real estate agents responded letting him know no funds would be returned without the execution of a termination agreement authorizing a release of the earnest money to the seller.

The buyer responded:

Hello,

I received your emails and the contents are well noted. I am unaware that the earnest monies is non-refundable, I have just gone through the PSA now! From the ongoing ordeal relating to my backing out of the property buy deal, like you already know my wife and I have decided to reinvest these funds into other businesses over here in Hong Kong. It is 1:26 AM Thursday 15 October and we are yet to go to bed due to the heated argument over this house buy issues.

The bottom line is that we are not buying this property and no longer interested owning a property in the U.S at this time. To this end I will advise you to remit a portion of the funds via wire transfer as it is been needed immediately to finance part of our reinvestment deal. For clarity purpose I will provide you the details of the beneficiary (business associate’s agent) in a separate email. You are to make a wire transfer of $86,830.00 (Eighty-Six Thousand, Eight Hundred and Thirty United States Dollars) with details as shown in my next email. I hope the wire transfer can be done today (Wednesday your time).

I know there will be a balance of funds in your coffers after this wire transfer for $86,830.00 is done. It is worthy to mention that you are hereby authorize to deduct any cost associated to this backing out phase of this property buy deal. Fees such as cancellation fee (if any), non refundable earnest money fee (if any), commission and other expenses should be deducted from this balance left. I will expect you provide a receipt/notification for whatever deduction that will be made. Also I understand that the wire transfer fee will be taken from this balance funds. When this done I will expect you update me on a final balance amount. Due to the uncertainty associated with the ongoing pandemic, wherein one can no longer walk into the banking hall without a prior booking/appointment I will suggest that you can do an online bank to bank wire transfer from your office, and immediately follow up with a call across to your bank for them to ensure the transfer is effected immediately, is this possible?

What do you think of my idea?

I will expect that you furnish me with a scanned copy of the wire transfer slip for record keeping purposes. I hope this goes fine as my wife and I have been involved in some heated argument these last few hours thus bringing about some mental and emotional stress for me.

Kindly acknowledge this email.

Regards,
Billy Buyer

Two days after receiving the second email from the buyer, the bank returned the check to the settlement agent as invalid.

The settlement agent was grateful he had not refunded the money as the fraudster asked. The settlement agent resigned as escrow holder and the real estate agents agreed the purchaser was not a serious buyer. The seller put the house back on the market. This buyer was clearly trying to take advantage of the time it takes the issuing bank to return an invalid counterfeit check and defraud the settlement agent. In previous articles, we have identified when checks presented are not local, it’s buying the fraudsters more time. In some cases, they attempt to present a check from a third-party company, thus buying the fraudsters more time. The scammers regularly present checks from a foreign bank, buying the fraudsters more time.

All these tricks ensure the foreign or third-party checks take longer to get returned to the settlement agents’ trust accounts, indicating it is invalid.

With our real estate market constantly shifting and changing, make sure you are aware of any scenario that raises any red flags.

Article provided by contributing author:
Diana Hoffman
Corporate Escrow Administrator
FNTG/National Escrow Administration