For instance, if a buyer doesn’t complete an inspection by an agreed-upon deadline, the seller may be able to keep the earnest money.īut in the worst-case scenario, a seller may just decide to keep a buyer’s earnest money based on no legal grounds. If the buyer fails to meet deadlines within the time frame of the contract, that buyer is considered to be in default and will forfeit the right to any earnest money. When doesn’t a buyer get the earnest money back? For example, purchase agreements usually have contingencies that stipulate that earnest money will be returned if a home fails inspection or can’t get title insurance due to a lien on the property.Ī financing contingency-wherein the buyer cannot obtain financing-will also ensure a buyer’s right to an earnest money refund. It should spell out the circumstances in which you’ll get your earnest money deposit refunded. And that decision all comes down to the terms of the sales contract. Then either the trust company or real estate firm determines whether a buyer gets the earnest money back. If the deal goes south, a small cancellation fee is generally taken out of a buyer’s earnest money deposit. While it doesn’t fully lock a buyer into the deal, it does certainly make it less likely the buyer will back out. A buyer gives the seller a percentage of the accepted offer to show he’s serious. Giving a seller earnest money is one of the first steps in the homebuying process after the seller accepts an offer. Is the seller legally able to withhold a buyer’s earnest money, even if the house is relisted? Let us help you make sense of this stressful situation.
Then, the plot twist: The seller relisted the house and refused to return your earnest money.
Maybe the seller failed to clear the title or complete repairs by target dates. Hurrah! Then you went through all the usual steps of homebuying-such as negotiating a contract and agreeing to certain contingencies-to get you to the closing table.īut in the end, your homebuyer’s dream scenario turned into a nightmare because the home purchase didn’t close, quite possibly through no fault of your own. It’s every homebuyer’s dream: You saw a house you loved and made an offer the seller accepted.
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