Expert: Karyn Foley - 7/9/2010

Question
I was pre-approved for a FHA home loan and signed a contract with the builder to buy; however, prior to closing I was part of a reduction in force lay-off and the loan did not go through.  Am I entitled to a refund of the earnest money?

Thank You

Answer
Dear Earnest:  I am sorry that you have been laid off, and are now facing the problem of getting back your deposit.  Please check over your contract and see if you bought the home contingent upon you being able to obtain financing.  If so, you should be able to get your deposit returned.  Please take another look and see if that contingency had a time period cut off date.  Perhaps that date has passed and there are no more contingencies.  Have you had a talk with the builder, and if so, what does the builder have to say about it.  It might be possible for you to work out a compromise with the builder. The builder has an obligation to try and resell the home as quickly as possible!  Usually, the earnest money deposit is 3%; I hope you did not put more down.  If you cannot reach satisfaction, you might consider obtaining a legal opinion.  In addition to a real estate attorney, most large cities have storefront legal offices that give less expensive service, sometimes by para-legals.  Plus, there is always the option of small claims court which is a less expensive route to follow if you are comfortable knowing the contract supports the return of a deposit.  You should also consider asking that question to this same AllExperts site, directing to a law category.  We real estate agents cannot "practice law without a license"!  Good luck to you, I hope you prevail.  KARYN FOLEY