Cashing the Option Check, 1-11-2018

This week Dawn answers the question, does the Seller have to cash the option check within a certain time frame.

Steve Holzwarth
over 1 year agoJanuary 11, 2018
Hey Dawn and Happy New Year! Could you please address the buyers earnest money returned NSF. Title company didn't cash until 2 days prior to closing. Seller stated buyer was in default due to not closing on the closing date. what next?

Thank you! Still enjoy listening to your wise advise!
Jeanette Edwards
over 1 year agoJanuary 11, 2018
I recently represented a buyer who terminated the contract where the lender did not approve the loan because of an appraisal issue.  

Evidently the seller had not cashed the option check. The buyer received their earnest money from the title company. The option check had not been cashed yet(it had been appx 20 days under contract) and the buyer stopped payment on the check. Obviously the seller was unhappy.  I talked to the buyer and explained again that they were not to receive the option money back as they  didn't terminate during the option period. I asked the buyer to send another check to the seller and they said they would send it.  My concern is what if the buyer had refused to send another check to the seller?
Dawn Moore
over 1 year agoJanuary 16, 2018
Jeanette, the Buyer owes the seller the money and never had the right to stop payment irrespective of when they terminated the contract.  And, actually, putting stop payments on checks that are due can become a criminal offense.  Hope the Buyer pays it.
Dave Folsom
over 1 year agoJanuary 12, 2018
02:51:36
Additional great advice Dawn. I have begun instructing my sellers to cash the option check asap as I had three instances last year where the lender wanted proof that the check had been cashed. I don't think it is due to the size of the check but that the lender is giving credit to the buyer for having paid the option fee and they want to balance on their closing disclosure.
Dawn Moore
over 1 year agoJanuary 16, 2018
Dave, thank for telling me about the lender requiring.  I spoke with several lenders that didn't require proof simply because the fees were not significant enough to impact the equity to loan value ratio.  Always wise to get the Seller to cash immediately.
Traci Gorton
about 1 year agoAugust 3, 2018
Hi Dawn..I am with GSB Mortgage (Bank of the West).  I love the girls in your Flower Mound office by the way... 
Underwriters are requesting proof of cleared or cashed option money check for all government loans or we can't show it as a credit to the buyer on the CD.  It is typically not needed on conventional loans but needed in order to sell a government loan.  Thanks for all your great information.
Anonymous
over 1 year agoJanuary 12, 2018
Hi Dawn
Anonymous
over 1 year agoJanuary 18, 2018
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