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.