Question for Real Estate attorney, re: deposits - Posted by Nathalie

Posted by Tim Fierro (Tacoma, WA) on March 28, 2002 at 19:37:06:

Look at the purchase and sale contract very closely. See if there is a clause that says if the buyer cannot get financing, they can walk away. If there is, and the buyer can not get financing, they should be able to get their money back. This is where you need to read the contract to see what it says about earnest money.

I am an agent and I had a case before where the buyers were my clients and they did not close due to financing issues. The contract called for a certain date of close, and we extended it, and then didn’t close because the financing did not come through. The out we had was that even though we said we were going to get financing within 30 days, we never released the contingency so we were entitled to the earnest money.

So read the contract and look for a financing contingency and see if it addresses this issue for a legal reason to walk away, and check to see if there are any specific clauses that deal with earnest money.

Question for Real Estate attorney, re: deposits - Posted by Nathalie

Posted by Nathalie on March 28, 2002 at 15:54:51:


I have someone with the following situation. I do not yet have a copy of all their signed contracts, but I am trying to help them out as best as I can.

Basically, the situation is that they put a deposit for a house they want to purchase. The house is worth about $165,000

I believe so far they have given about $30,000 or so (as they were expecting to get financing for about 70% (due to poor credit, etc…)

[I’ll post more info later when I have their contract in hand. I’m not even sure who is holding on to the money at this point, the seller or an escrow company…]

Anyway, to make the story short, getting approved financing is taking a long time and they still don’t have an approval, and they are/were supposed to close April 1.

They were just contacted today and told that the seller has spoken with an attorney and if they don’t close on April 1 they will lose all their deposit.

I don’t know whose fault the delay is (could be the buyer’s fault, in terms of taking too long to get the required documents together, etc…), or it could be simply that their request for a loan will be turned down.

The issue here is that if they don’t close on April 1, will they lose their deposits? Is that legal?

Again, I don’t have their contracts in front of me, and I will post more info when I do. But for now I’m curious what the standards/laws are regarding this.