When is a down payment fully refundable?
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When is a down payment fully refundable?
A family member wanted to purchase a motorcycle and gave a down payment. There was no written contract although the buyer send a text stating, “I am serious about the bike, do not sell it”. After 4 months he states he cannot be approved for a loan. Now he wants a refund. He was given back over half and we kept the rest. He sent a letter by mail requesting the remainder of the balance or he will take us to small claims court. What’s the law.
Asked on June 27, 2011 under Business Law, North Carolina
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
In most States a down payment for an article is refundable unless there is a written agreement signed by the intended seller and intended buyer that the amount placed as a down payment deposit is not refundable and is to be considered a "liquidated damages" deposit.
You gave back one half of the deposit placed for the motorcyle. Your action of voluntarily giving back part of the deposit suggests that the entirety was fully refundable since there is no written agreement to the contrary.
Given the circumstances, it makes sense that you consider returning the balance of the deposit and focus your efforts in selling the motorcycle. Personally, you should have resumed your efforts to sell the motorcycle after one month passed after the deposit was placed when the amount agreed upon was not paid in full.
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