Stop Payment on Earnest Money Down Payment

OK, I’m in Michigan and I know that you are not my Lawyer. That said, here’s my situation; I made an offer on home and asked the homeowner if it was in a floodplane. Thier respose to me was that they were not required to have flood insurance; OK so I went forward with the deal and wrote a $1000 earnest money check to the broker. I had the home inspected and started loan proceedings and was told that flood insurance was required because they were in a FEMA flood plane. I went to the city offices and found out that the seller not only knew he was in a flood plane; but had actually had a surveyor come out and determine that yes they were in a flood plane. Turns out that FEMA reassessed the property as being in a flood plane in 2006 but did not require the present property owners to obtain flood insurance.

Needless to say I am peeved at the seller for not answering my question honestly and have written documentation showing that they knew that they were in a flood plane; regardless of wheter or not they were paying flood insurance. Since I don’t trust this guy to return the check (he already lied to me) could I just stop payment on the earnest money check that I put down and tell him to take me to court over it? Would I be breaking any laws by doing so?

You have the option to stop payment and let him take you to court.

I don’t suspect you’re actually breaking criminal law (IANAL, so you might want to actually speak to one), You might be breaching a contract. But you’ve already stated you’re willing to let the courts decide whether that’s true.

I’d say you have enough to counter sue that the contract was fraudulent. He didn’t lie, but he had intent to decieve.

Does your state require that the seller fill out disclosure statement? The Minnesota version of this flat out asks if they know that the house is in flood plain. If there is a disclosure statement, and that is marked as No, they don’t know, then you would have a very strong case to get your money back.

Since this is a question on a specific legal matter, your best course is to seek professional legal advice. On that basis, I am going to close it.

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