What to do if we signed a contract to purchase a large boat and paid a $10,000 deposit but our financing fell through and now the seller won’t return the deposit?
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What to do if we signed a contract to purchase a large boat and paid a $10,000 deposit but our financing fell through and now the seller won’t return the deposit?
Unfortunately the contract did not address the handling of the deposit in the event of our financing falling through. I think the money should have been held in an escrow account but seller says he spent it. Can we sue him to recover even part of that money? We live in one state but the seller lives in another and all signed documentss are based on their state law.
Asked on September 4, 2012 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Unless the contract of sale had an actual finance contingency--so some term or clause stating that you would receive the deposit back in the event you could not get financing--you would have no recourse and no right to recover your deposit. When there is no such financing contingency, the seller gets to keep the deposit if the buyer does not or cannot go through with the sale, so long as the seller himself was not the cause or reason that the sale could not be completed.
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