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Several weeks ago a couple put a deposit on my car with the agreement that they would pick it up on July 29th. I attempted to cash the check that they wrote us and of course it bounced, but I just figured we would work that out at final sale time. We didn't hear from them when the time came for them to pick up the car, so we called them and they said they were coming after it, but again did not show up. This went on for 3 weeks. These people never once called us to tell us anything, they just continued to say they were coming and then not show up. I made numerous long distance calls to them to try to get the deal to go through. They finally officially (on Aug 20) backed out of the deal, so I tried to cash their check again and luckily it cleared this time. I feel this is how this whole deposit thing works. Today I received a phone call from them (amazing they really do know how to dial a phone) demanding that I give them their deposit money back. Let me add that going on the faith that they would buy my mustang, I in turn put a deposit on a vehicle which I have lost. Is there any way on earth that I owe these people that money back? They are already threatening to take us to court, but I don't feel too worried. Should I?
 

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<I'm not a lawyer disclaimer here, but my best friend is an insurance lawyer, for what that's worth>

Do you have any agreement on paper / email, anything other than verbal agreements, that they would pay you $X as a deposit, and pick up the car on such-and-such a date? If so, you're right, that's how the deposit thing works.

If not, you'll probably still prevail, but it may be more difficult if they choose to take you to court. It may be a little dicey since you cashed the check AFTER they had backed out of the deal.
 
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Actually, I cashed the check before they officially backed out. I tried to cash it immediately, but it bounced, then I called the bank every few days until I found out the check would clear and then drove 60 miles round trip to cash it.
 

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Ive been in the car business for 30+ years and take it from me, you owe them nothing. Thats why you collect a deposit. Its good faith money that a buyer puts on a car to hold it until they pick it up. If they dont pick it up and back out its yours period! Dont let them push you to give it back, its yours.

JBauer4363
 

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I'm with JBAUER4363. That's "good faith" money. I wouldn't sweat it a bit. Probably with the dollar amount, they'll have to sue in small claims court, and they'll have to do it in your jurisdiction and make all the travel back and forth to do it. The other cool thing about small claims court (or at least in California, so I'm assumming it's the same in other states) is that neither party is allowed to bring a lawyer into court, so you don't even have to worry about running up a lot of legal costs.

I'd completely ignore them unless you get served to appear in court.
 

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I will put the same caveat as Steve (66_Pony): <I'm not a lawyer, so this advice holds no force of law>

I'm more familiar with real estate, but cars should be the same way. If you put earnest money down on a house, then back out, you lose the money.

Earnest money helps the buyer and the seller--it holds the house for the buyer (seller can't sell to anyone else while the legally binding earnest money agreement is in force), and the seller is compensated for lost business if the buyer backs out.

It would help immensely if you have signed paperwork describing down payment and terms (de facto declaration of intent to purchase). If you don't, verbal agreements aren't worth much (he said/she said), but a check is.

If it were me, I'd keep the money as compensation for lost business (you were prevented in selling to someone else while they still had interest--and the check was declaration of intent to purchase, and you were also prevented in purchasing another car).
Daniel
 

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my 2 cents is that it depends how it was represented. refundable vs nonrefundable deposit. No representation leads to someones interpretation. My interpration would be non-refundable. That is usually the intent of a deposit.
 

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<freakin' lawyer disclaimer again>

I agree pretty much with everybody else. Bear in mind that the check, in all respects, is CASH MONEY. One thing I would do, however, is notify them, in writing, that by reneging on the agreement to purchase that they are forfeiting their earnest money deposit and that it will not be refunded to them. I would send this notice by both regular and certified mail (in case they refuse the certified piece) and make sure you indicate at the bottom of both copies that notification is sent by both methods.

This kind of beats them to the punch if they are stupid enough to file a claim against you.
 

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I wouldn't lose any sleep over it. It sounds like they are hoping that you are as stupid as they apparently are. I like the way that you managed to get the check cashed. I would have done the same thing.

Most people understand what a deposit is for. Maybe these people didn't understand, but I'll bet they will know next time.
 

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A deposit is made as *a Good faith deposit to complete the deal*..usually it is held until contracts or a title changes hands..unless you have something in writing stating the deposit will be forfeited if deal is not completed within a certain period of time, the deposit money *known as Earnest Money* will have to be returned..if they take you to court they will win..just return it and chalk it up as a learning experience..
 

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Just one more thing. I would not at this stage send them anything or put anything in writing!! The check that you had is enough. If you provide them with something in writing there is just a chance that you may state it wrong and they will have something to use against you. Ive been in there before and you will not lose if they take you to court (most of the time its a bluff). So I would forget about them and if they call tell them that now that they have mentioned that they make take you to court that you will not be able to talk about it with them anymore. My 2 more cents

JBauer4363
 

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As an investigator, I practice both law and medicine without a license. Seriously, I don't think you owe them a thing, so don't let them bully you. I agree with the prior posts about the deposit issue. They knew they screwed up, and I suspect they a purchased another car. BUT, giving the other party the benefit of the doubt, it would be interesting to know the amount of their deposit. For example, if the car sold for $10K and the deposit was $5K, a liberal Calif. judge would determine that the deposit amount was excessive. I think keeping 10% to 25% of the sales price for a deposit is reasonable for your trouble. Can you document how many potential buyers you had to turn away after relying on their intent to buy? Can you document any other charges...phone charges, bank charges, the cost to advertise your car again? This can help your case. Any other questions, send a PM.
 
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The only time I have ever asked for my deposit back was from a seller who outrageously mis-represented a car I was interested in buying. It was through a classified ad and he had no pictures. I called numerous times to ask the condition and such of the car (which was a '65 GT coupe with a bench seat!). I sent him like an $800 deposit and drove to Maryland from NC a few weeks later with my buddies trailer. We get there, and this is the most severely rusted Mustang I have ever seen. I mean, we are talking EVERY SINGLE sheetmetal componenet/piece on the car had rust through. It was simply horrible. I told the guy there was no way I was going to buy the car and I wanted my deposit back. He said he would mail it to me. After 6 months of e-mails and getting other family members involved, the a-hole finally gave my deposit back.

In your case, you did nothing wrong. The deposit is yours.
 

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Being a person who hates conflict, I'd probably give it back to them minus expenses, but it would seriously depend on how much we are talking about.

Besides, they always had the option to put a stop-payment on the check and were probably hit with fees each time you tried to cash it.

Al
 
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For those of you who have mentioned the dollar amount . . . the sale was for $7500 and they gave me a $500 deposit. As far as giving it back minus expenses, they still would owe me money. I had put down a deposit on another vehicle (which I lost), there are the bank charges, long distance phone charges, advertising charges, etc. Which fortunately I have documented all of this along the way. I think I'm just going to ignore their request until I hear from their attorney and see where it goes from there. That is IF I hear from their attorney.
 

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Common misconception. At least in California you certainly DO get your deposit back on real estate even if you back out. No question about it!

For cars, it isn't so clear. You can't blame them for at least asking for money back, over and above anything you can't substantiate as an expense.

If it only cost you $100 extra to sell the car after they backed out, then keeping $500 seems unreasonable, and you'd lose (appropriately) in small claims court.
 

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I think based on the fact that you ALSO put a deposit on a car with the intent that you would soon have the money from your car sale to purchase another car, and also lost your deposit because they didn't follow through will be more than enough in the judges eye's to see in your favor if it came to it.

One suggestion if it's possible in your state, If they take you to small claims court for the $500. I would counter sue them for the maximum up to the $7500 you lost because they backed out of the deal. I think you will find they will back out and drop what ever suit they bring up against you, especially if they think in the slightest they will have to pay you a good chunk of change! ;)
 

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That sounds like a win/win situation for the buyer, but the seller gets stuck. Not much point in accepting a deposit if it means nothing.
 
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