As a seller, what are our rights to keep an earnest money deposit?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
As a seller, what are our rights to keep an earnest money deposit?
My wife and I were under contract with a prospective buyer to sell our home. The inspection report revealed possible asbestos in the attic insulation and one of their asks was to have it abated at our expense. They were also asking for $8,000 in concessions for other repairs. Long story short, we agreed to all the terms and signed off on the repair agreement. The buyer then decided to walk away from the deal leaving their earnest money of $5,200 on the table. However, they want their earnest money back and do not agree that it is ours to keep. Besides us losing several weeks by not trying to find another buyer, the impact of this also caused me to take funds out of investments in order to close on our new home which will I will need to pay taxes on for capital gains. I talked to my realtor about offering a 50/50 deal to split the deposit funds. If this doesn’t work, he said the only other way to resolve this is to litigate. I wanted to get some legal advice on how to handle this situation and if litigation is the right option, then would this even make sense financially to pursue.
Asked on February 15, 2017 under Real Estate Law, Pennsylvania
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
The law is clear: if the buyer walks away when the seller is complying with all obligations, the buyer has breached the contract and the seller may keep the deposit. If they will not agree to release it to you, you could sue for a court order that it be turned over to you--that, unfortunately is the only way to get it if you can't work it out voluntarily, so you would have to bear the cost of litigation. If forced to litigate, you are not limited to the deposit; if your costs due to the failed sale exceed the deposit, you could sue for the additional amounts, too.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.