Can we get an earnest deposit back?

Question

My parents are buying a house in Arizona, but first they have to sell their property in California. Since it might take up to a few months for their property to sell, by which time the price of the property they are trying to acquire might increase, my parents signed a purchase contract and gave a $10,000 earnest deposit in order to 'lock' the price of the new property. Now, if someone comes in and decides they want to buy the property at Arizona, then we'd get 48 hrs to decide whether to complete the purchase of the property or let it go. If we decide not to purchase the property at that time, then we'd get the earnest deposit back. My question is, if we decide to cancel the purchase, would we get that earnest deposit back? By the way it was signed last Saturday.

Answer 1

Fortunately and Unfortunately you can almost always get a deposit back. Look at it from the seller's point of view. If they release your deposit, they can move on with a sale to someone else. If they hold onto it they are bound to your contract.

Contracts are very lengthy documents, you would need to read the part about the deposit carefully.

Usually both parties must agree on the deposit.

Answer 2

The sellers are not required to return "earnest" money deposits. The purpose is to ensure fulfillment of the contract. If you back out, they have a right to keep the deposit but they can not sue for specific performance on the contract (force you to buy the property). If in an earnest money contract, the seller violates the contract, the buyer is entitled to the return of the earnest money plus an equal amount. Again, the buyer can't sue for specific performance, only for the earnest money return.

If there is a dispute, the escrow agent or broker who has the funds on deposit can make a determination and release the funds after notice to all parties or more than likely if there is a dispute, the broker will either seek a determination from your state's real estate licensing commission or deposit the funds into the registry of the local court and file a concurses proceeding and let a judge decide.

If the contract did not indicate the deposit was earnest money, then the seller could retain your deposit and sue for specific performance and vice versa. If the seller defaults, then the buyer in a regular money deposit contract could sue for the return and/or specific performance on the contract. And any liquidated damages that may have been agreed to as well. In a money deposit contract, the amount of the deposit is usually stipulated as liquidated damages. Check your contract!!!!!

Answer 3

It depends how it was worded, since you have first right of refusal you could just wait it out until someone else bought the property. Sometimes the seller will let you back out of the deal. Talk to the escrow officer or your real estate agent to find out for sure. If it was a non-refundable earnest money payment then chances are slim that you will get it back.

Answer 4

ask your realtor, and read your contract!

typically, if you BACK OUT because YOU CHANGED YOUR MIND, earnest money can be forfeited. an interpleader action can be filed with the magistrates' court, and the sellers can "sue" you for this earnest money.