If for some reason a contract falls through and a deposit has been put down, can the real estate keep that deposit?
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If for some reason a contract falls through and a deposit has been put down, can the real estate keep that deposit?
Someone recently came forward who worked with the real estae agent we are working with and said that his financing fell through and he put down $10,000 which the real estate agent is refusing to give back to him. I have to put my deposit down in the next 2 days or so but don’t want to be at a loss of that much if something in the house inspection or appraisal ends up
changing the value of the sales price. How can I guarantee that all my money in the deposit will be returned to me?
Asked on July 8, 2016 under Real Estate Law, Virginia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
The deposit must only be returned if--
1) The *seller* violates or breaches the contract of sale, such as by not being able to provide good title (e.g. there are liens on the home that cannot be cleared; or another co-owner who does not consent to the sale), or by not being able to close, or by not being able to actually transfer the house because it burned down prior to the closing, etc.
2) There is a provision in the contract which allows you to terminate it without penalty and get your money back, *and* you fully comply with all its terms and conditions. For example, a mortgage or financing contingency commmonly provides (if the contract contains it) that if the buyer cannot secure financing by a certain date, he or she can give the seller notice by or on that date that the sale is terminated; if there is an inspection contingency, it would typically would allow you to terminate the contract if an inspection finds problems which the seller refers to correct.
3) It is discovered that the seller committed fraud by lying about something significant, such as by claiming the property is not in a flood zone when it is, or lying about an oil tank which must be properly removed and remediated.
Otherwise, once you sign the contract, yo are obligated; and if you cannot go through with the sale, even if for some reason beyond your control (e.g. losing a job), you lose your deposit.
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