My wife and I put in an offer on a house in the middle of May and we put down the standard 1% earnest money. Along the way we hit a lot of roadblocks from the sellers not wanting to let us get inspections to delaying inspections. We had to sign 2 addendums give them longer on getting a well and septic inspection and another addendum to extend the contract a little over a week. Then a week before we were going to close our title company found out that a fence and an outbuilding on the property we were buying was encroaching onto the neighbors property. The title company recommended that an encroachment agreement would solve the problem, but we did not feel very comfortable with that. The sellers went ahead and got paperwork for the encroachment agreement and came to an agreement with the neighbor. But we still saw it as a ding against the property, even though it is a legally binding contract it just didn't feel like a good fix to us and we never signed anything stating that we agreed to it.
In that process we also found out, from our title company, that what the seller gave us as a survey was not a true survey, but was instead a plot map from a builder who did an addon to the house a few years ago. To make matters worse the title company said that there was no survey on record for that property but based on a few of the adjoining properties and survey stakes they found in the ground they had a good idea of the property lines and that is how they figured out there was an encroachment. The adjoining properties that had the surveys though were surveyed back in the early 90s. Per our contact though the seller was to provide us with a recorded survey, but we did not specify the age the survey had to be.
With all the headaches along the way and these final two things about the encroachment and survey we decided to end the contract. The sellers thinks they are in the right because they got the encroachment agreement signed and said they did it because it was what we wanted. We feel sorry for the sellers because this whole process has kept their house off the market for over a month, but in the end it is not really our fault, at least not how we see it. I talked to our broker and he was saying we have a few options.
1. We could all (us, sellers, brokers, realtors) sit down in a room and talk it out and see who gets the money or how it is split.
2. We could have our broker work it out with their broker and see who gets the money or how it gets split.
3. The sellers restructured the outbuilding and moved the fence so that they would not have to have an encroachment agreement and have relisted the property, so we could always try and get the property again, but there is still not a recorded survey. My wife and I like the property but not sure if we want to deal with this mess again on this property.
We would like to get all our earnest money back because we are already out the inspection money, but we feel bad for the sellers too. We am not even sure we can get it all back because both parties think they are in the right and both parties have to come to an agreement, or it has to go to court. But court would cost us more money because then we would be paying for a lawyer too. Should we offer to give them part of the money for their troubles in hopes that they will accept and move on? What if they want all the money?