Posted by Rich-CA on May 03, 2008 at 11:18:35:
In Reply to: Who owes Who money? posted by Shawn on May 03, 2008 at 06:46:15:
agreement and the sales contract say.
What kind of partnership did you form? What kinds of agreements were signed? This will tell you whether or not your partner is on the hook. You may have to sue him anyway, since he bailed.
What does the sales contract say about earnest money deposit? Did both you and your partner sign the sales agreement? Does it have a clause anywhere in it stating that you, as the sellers, have joint and several responsibility? If it does it means you personally can be sued for the entire amount of the deposit if they cannot locate your partner. If it does not, then you would only be responsible for your half.
The deposit should have gone into escrow and not your bank accounts - this may be illegal in your state and the buyer may be able to file criminal charges as well. You have no business keeping a deposit unless you have fulfilled the contract. You did not. Since your partner bailed, then in order for you to not break the deal with buyer/seller, you needed to buy the house and resell it. You did not do that. Neither the buyer or seller has any interest in your side deal with a partner who is supposed to actually provide the funds to buy the property, so to them the fact your partner bailed is not relevant.