ask george & chuck
April 21, 2008

Return of earnest money, owners associations
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: My husband and I made an offer on a house that was accepted. We paid $500 in earnest money and a $50 option fee. We made out both checks to the real estate company. Our contract outlined repairs that were to be done before a certain date; these repairs were never attempted or completed. We decided to terminate the contract, but the real estate company won't give us back our earnest money or option fee. We signed a release form. Should we get our money?

Answer: If a real estate firm represent the seller, you likely signed a One To Four Family Residential Contract (Resale) when you agreed to purchase the house. Paragraph 23 of this contract specifies that the option fee should be made payable to the seller, not the real estate firm. There is nothing wrong with the earnest money being paid to the real estate firm. You state that you signed a release form. To whom did you release the funds? The seller or the real estate firm? Did you read the contract? What does it state?

It sounds as if you were not represented by a real estate professional in this transaction, as she would be able to answer these questions for you. Hire a real estate attorney to read your documents and give you an opinion; ask what his fee is before you agree to pay for his services.

Dear George: My property owners association has an architectural control committee, which was created in the association's original charter. Are there any legal regulations that deal with how such a committee operates?

Answer: The property owners association in most circumstances has the right to delegate its decisions and enforcement to an architectural control committee. However, this committee is limited to enforcing existing restrictions, not creating new ones. For instance, if the restrictions require "acceptable" paint colors, the committee can determine what is acceptable. It can also determine whether a building's design conforms to the standards of the subdivision, but it can't establish new minimum sizes or exterior finishes.