Expert: Jessica Bryan - 11/22/2006

Question
The purchase of the home was contigent upon the sale of our home. With there being a contigency in effect, would they guy have a right to keep the earnest money that I put up?

Thanks again,
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The text above is a follow-up to ...

-----Question-----
Very recently we were supposed to sign papers for the close of the home we were selling and the one we were buying. At the beginning of the line (4 families involved with 4 different home loans), the first guy didn't sign. 1 hour before we were supposed to sign, we got the dreaded call that we weren't going to be able to sign. Now we've got a few problems:
1) For the home that we were going to buy: Who pays the fees involved for the time and effort put forth to get all of paperwork in order?
2) Carpet was purchased by a contractor to be installed (and contractor paid) after closing - carpet was to be included in the loan.
3) We signed a financing addendum. The guy who's home we were going to buy now wants to keep the earnest money. I can't get a loan for the full amount of what the loan would need to be without having the money for the down payment from the sell of my home.

Any advice would be great!
Thank you for your time!
-----Answer-----
Dear Stephanie;
The first thing that comes to mind is; did you have a contingency agreement?  If so, then you can get out of the contract, but if it was no longer in effect then the only thing you can do is go after the people who didn't sign for the purchase of your home.  If they need to go after someone then it will be the next person in the chain and so on.  Unfortunately, you will be responsible for costs and the only way to recover is to consult an attorney and see what the contracts say.  Without reading through each contract I really cannot advise.  However, on your two contracts, you can read them and clearly see if there is a loan contingency and if it is still in effect.  

Good luck and best wishes,
Jessica Bryan

Answer
Hi Stephanie;
If the contingency is still in effect and you didn't sign anything to drop the contingency after your home went under contract, the seller of the home that you are buying does not have the right to hold your earnest money deposit.  You will still need to consult with an attorney if the Seller refuses to return your money but if the Seller has a real estate agent he/she will be advised to return the deposit.


~Jessica Bryan