Can I get my earnest money back from a builder?
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Can I get my earnest money back from a builder?
We signed a contract to build a new home on March 28, 2018 with Fischer Homes in
Cincinnati, Ohio. We received notice a few weeks ago that our financing is no
more. We sent the denial letter to Fischer Homes and they have agreed to
terminate the contract but refuse to give back the 11,000 earnest money. Is
there any way to get that earnest money back?
Asked on August 21, 2018 under Real Estate Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
You are only entitled to the return of your earnest money if there is a "finance contingency" or similar clause in the contract permitting you to terminate the contract without penalty in the event you can't get or lose financing, and you fully comply with such provision's terms. Otherwise, if you cannot or do not close for any reason, including a lack of financing, when the seller was ready and wiling to go ahead, the seller may keep the earnest money. The entire purpose of earnest money is 1) incentivize the buyer to go through with the sale, because he/she has money at stake; and 2) to give the seller a reason to take the deal and stop trying to sell the property to others by guarantying them at least some payment if the buyer defaults.
If you do have a finance contingency or similar provision and are in compliance with it, so that under the terms of the contract, you should get your money back, if the seller will not comply, you can sue them for "breach of contract" for the money.
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