Agent

Who’s entitled to buyer’s deposit in failed real estate deal?

Legal ramifications may surprise you

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Sellers often feel that they should be entitled to keep the buyer's deposit money if the buyer fails to complete the purchase for any reason. But, more often than not, when a home purchase transaction falls apart, the deposit ends up being returned to the buyer. Most purchase contracts include contingencies. These are conditions that must be satisfied in order for the sale to go through. Usually, the buyer is entitled to have his/her deposit returned if he/she is unable to satisfy a contingency, depending on how the contract is written. For example, suppose the buyers include a contingency that specifies the terms of the financing they'll need to arrange in order to close the deal. Furthermore, the clause stipulates that if the buyers are unable to obtain that financing, their deposit will be returned to them. They earnestly attempt to line up the financing, but are unable to do so. Maybe interest rates rose to a point where they could no longer qualify for the loan they needed. Or,...