Brando,
Based on what you have posted, it does look like the best course of action would be to return the money.
And get on the phone to others who were interested in the house, they may not have found something yet.
In the mean time…a ? or two…
Did the potential now backed-out tenant buyers sign anything with you?
An application?
Any language on that?
In the future, collect money, AFTER they have signed the contract.
I do that almost all the time with tenant buyers in houses I’m selling that way.
At times, when people want to pay some, or most of the option money to hold a house (standing there with cash in hand, and lots of it gets my attention), and meet soon (never longer than 24-72 hours), to sign and complete payment, take possession…I will have them fill out an application, which has language in it covering this…
Here it is:
I Hereby deposit $ As option/earnest money to be refunded to me if this application is not accepted within 30 Business days. Upon acceptance of this application, this money is to be applied toward the option money or security deposit as outlined in the lease or option agreement . When this application is so accepted, I agree to execute a lease or option agreement at the discretion of the landlord/seller within 5 days after being notified of acceptance of this application, or the deposit/option money will be forfeited as liquidated damages in payment for the processing of my inquiry and application, including making necessary investigation of my credit, character, and reputation. If this application is not approved and accepted by the owner/agent, the deposit will not be refunded, and the application hereby waving any claims for damages by reason of non-acceptance which the owner/agent may reject without stating any reason for doing so.(Option/earnest money to be paid by certified check, money order or cash)
In addition a $ non-refundable application fee will need to accompany this application before it can be processed. (To be paid in cash, money order or checks made out to Landlord/Seller’s name @ 123 Any street, yourown, your state, zip code)
Now, a disclaimer…this is not legal advise, never been tested in court, and may or may not comply with your local laws.
So, check with a good competent RE attny locally before including in your application.
Now, with that said, I’ve also only really had to ‘use’ this, a handful of times, as 99% of my tenant buyers do move in, and sign everything etc.
A couple, long time ago, placed some money down, agreed to show up within 2 weeks to pay more and sign contracts…only to literally blow off appointments to sign and get keys, pay, etc, more than once.
Each case, as we’d turned down other potential buyers, thinking the place was sold, we kept the earnest/option money, paid thus far.
Each kicked up heels, first went no where, made noise, went away.
Second one, got a lawyer, who told her they had no case, went to the police, who filed a report, no action taken, no crim, BUT, referred the person to the state RE commission.
Who sent me a letter, demanding I refund, and that I answer right away, as well as come to their office, 200 miles away.
I told them on the phone, “ah, no”.
That went away, and they, the state RE commission sent me a letter a few weeks later, stating upon ‘investigating your activites’, we have found the following (a print out of my website offering referal fees), and said I was brokering without a license, and to stop.
I sent that to my lawyer, who sent them a letter, explaining things, and basically saying ‘he’s not a broker, is not acting as one, and if anyone is doing anything wrong, it’s those who are taking the fees, go pound sand’.
And they did, with a letter apologizing, and quoting a conversation I had with an investigator who said, “Oh, I thought investors had to be licensed agents or brokers”…she was new.
Anyway, try the above on your apps, and get the contact signed as you collect cash.
Until both are done, the house is still available.
Good luck,.
Jim FL