NC Court Instructs Realtors to Return $40,000 Escrow

After almost three years of court battles a Chapel Hill couple may finally get their $40,000 earnest money deposit back from an escrow account held by real estate firm York Simpson Underwood. The case arose from a December 2005 home sale that fell through when a house appraised for $200,000 less than the purchase price of $2,100,000. The house was eventually sold to another buyer a year later for $300,000 less than the original purchase price. The sellers and York Simpson Underwood were named as defendants for not refunding the $40,000 earnest money deposit. The NC Association of Realtors filed an amicus curiae brief.

The North Carolina Court of Appeals Ruling October 7th, 2008 held that:

This appeal arises from a dispute concerning a contract for the sale and purchase of certain real property located in Chapel Hill. Defendants, Richard and Barbara Stewart, appeal from the entry of summary judgment in favor of plaintiffs, Michael and Louise Harris, ordering that plaintiffs' earnest money deposit, plus any accrued interest held in escrow by York Simpson Underwood,L.L.C. (“York Simpson Underwood”) be refunded to plaintiffs. For the reasons stated herein, we affirm.

In sum, the undisputed evidence of record shows that plaintiffs appraised the Stewart property within a reasonable period of time following the 15 December 2005 deadline and such property appraised at a value less than the purchase price. The trial court properly concluded that plaintiffs had the option to terminate the Contract pursuant to the express terms of Section 13(f) of the Contract and that plaintiffs are entitled to a refund of their earnest money deposit plus accrued interest. Accordingly, we affirm the trial court's grant of plaintiffs' motion for summary judgment and denial of defendants' motion for summary judgment.