Expert: liznarr - 8/14/2007

Question
I put a deposit down for a condo, and the contract stated I had 15 days to void the sales contract.  Unfortunately, I went with their preferred lender to get the incentives the developers were offering.  But as I was waiting for the lender to get back to me the 15 days past.  Now, they're saying that my debt to income ratio is too high and are unable to approve me.  Now, I want to cancel the purchase, mind you a closing date was never set.  After talking to the broker of the condos with my concerns of not getting financing and if I was still eligible to get my refund back she's says I can't it's been past the 15 days.  Coincidentally, the lender gets back to me again, right after speaking with her and says he can work some numbers and send it back to underwriting and that'll take 48 hours to get back.  Do you think I have a chance to get my deposit back?

Answer
Hi Nicole,

Sorry for the delay in responding.

Most reputable real estate agents, builders and developers will have a provision in a Contract of Sale stating that the transaction is SUBJECT TO FINANCING, meaning that if you cannot get a loan, the Contract can be voided and all earnest money will be refunded.

When Contract problems arise, the wording in the Contract document itself is what dictates your rights, in addition to any applicable laws.  See if you can find any such wording in your Contract (subject to financing).  If so, you should be entitled to receive your earnest money back.

If there is no such language in your Contract, and the terms of the Contract were not fully explained to you (and it’s obvious they were not), you did not have what is called INFORMED CONSENT.  In other words, you did not understand what you were signing.

I would assert that it was the agent’s responsibility to make sure that you understood what you were signing.  You could report this to your state Real Estate Commission and file a formal complaint against any agent involved.  Most Real Estate Commissions, I would think, should be on your side in such an issue because the main purpose of most, if not all, Real Estate Commissions is to PROTECT THE PUBLIC (from unscrupulous agents).  You clearly have been taken advantage of by a licensed agent, and this is just plain wrong.

Not having all the facts and not having seen your Contract, what you wrote sounds to me is that you would have had fifteen days, for ANY reason, to void your Contract and receive your deposit back.  

By the fact that the PREFERRED lender dragged his/her feet in getting back to you, I would assert to the builder’s agent/broker of the condos that this was through no fault of yours and demand your deposit back.  Remember that the squeaky wheel always gets the grease, and this is no time for you to be shy.

Was the condo broker the only agent involved?  If so, did he/she disclose to you in writing that he/she was representing only the developer?  If not, you may have some recourse because of lack of agency disclosure.  

If you had an agent representing you, your agent should not have let the fifteen-day period slip by.  In this case, I would tell any agent representing you that you expect him/her and/or his/her company to refund your deposit… due to negligence in not properly representing you.  

Again, check the document you signed and look for a financing contingency.  If there is no such wording, and you do not get any assistance from your State Real Estate Commission, I would suggest obtaining legal advice.  What you are describing is unethical behavior and should not be tolerated.

Good luck to you, and write again if you have additional questions.

Regards,
Elizabeth