A potential buyer of my property put $500 earnest money down but backed out because of the home inspection. The home was listed "as-is", but on the contract, there is a right to cure. Who gets the earnest money?
2006-06-08 06:01:58 · 15 answers · asked by thegodfathertwentieight 2 in Business & Finance ➔ Renting & Real Estate
You need to read the contract, which I don't happen to have a copy of. Was the offer contingent on the inspection? It does not matter how you advertised it, it matters what is in the contract. If you are unsure, you might want to talk with your real estate agent.
2006-06-08 06:05:56 · answer #1 · answered by davidmi711 7 · 0⤊ 0⤋
It depends on what the contract says and it also depends on exactly what happened. The main issue is whether they violated the contract. If the contract gave them a right to a home inspection and gave you a right to cure any defects revealed by the inspection, and if they backed out before giving you a chance to make repairs, then they have violated the contract.
Once they violate the contract they have defaulted. If the contract does not say what happens in the event of default then the general rule is that the money stays in escrow until you re-sell the house. If you re-sell it for more than the amount they originally agreed to pay, the earnest money gets returned to them. If you re-sell it for less money than they agreed to pay, you get to keep the earnest money up to the amount of the difference. If you re-sell the property for $5,000 less than they agreed to pay, you get to keep their earnest money of $500 and you can sue them for another $4,500.
2006-06-08 09:19:12 · answer #2 · answered by Anonymous · 0⤊ 0⤋
In the state of Iowa it would be the buyer. You signed the cotract with the stipulation of the right to cure, that gives them a legal out. I would speak to your realtor about being firm on the "as is" for the next buyer to come along. Of course check with your realtor because real estate is largely governed by state. Best of Luck and if you dont have a realtor, get one before you show your house again.
2006-06-08 06:07:26 · answer #3 · answered by meona 2 · 0⤊ 0⤋
I don't think earnest money is refundable. I just bought a house and the check I wrote for mine to the realtor, I was told it was non-refundable. You might want to call someone in the real estate business to find out for sure. Good luck!
2006-06-08 06:07:38 · answer #4 · answered by sweetestthing 4 · 0⤊ 0⤋
Read the contract section regarding the terms of the deposit. If there is no clause stating the deposit is to be returned under certain circumstances, you may be able to keep it. It's best to have a realtor or real estate lawyer look it over to make sure, though.
2006-06-08 06:05:44 · answer #5 · answered by dcgirl 7 · 0⤊ 0⤋
As the seller you are supposed to get the earnest money. To be nice you could give it back, but they backed out and its supposed to cover you wasting your time by taking their offer. You lost time that you could have sold it to another individual.
2006-06-08 06:05:26 · answer #6 · answered by hermania 2 · 0⤊ 0⤋
contract will dictate who keeps the money in the event above siad parties violate the agreement. If they backed out b/c they could not get financing then there is a provision in the contract for that too.
2006-06-08 06:56:46 · answer #7 · answered by jondfwmortgage 1 · 0⤊ 0⤋
That money was in case the buyer tied up your time without making the deal. Keep it to make up for your time if you didn't show the house while this happened.
2006-06-08 06:06:36 · answer #8 · answered by FreddyBoy1 6 · 0⤊ 0⤋
You keep the money because its not your problem if they backed out.
2006-06-08 06:24:44 · answer #9 · answered by Interested Fish 4 · 0⤊ 0⤋
technically, you keep the earnest money.
2006-06-08 06:05:04 · answer #10 · answered by Scott D 5 · 0⤊ 0⤋