Foreclosure in 77079>Question Details

Geri Rennie, Home Buyer in Sevierville, TN

I had an associate tell me that in a CE class they attended last week, the instructor said that the earnest money was non-refundable

Asked by Geri Rennie, Sevierville, TN Fri May 25, 2012

under any circumstances. Is there not contingencies like inspections, etc anymore?

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10
Depends on the contingencies in the contract. On My contracts, I always have an inspection contingency where the EMD is refundable if and when during the due dilligence period the buyer wants to terminate the contract.
0 votes Thank Flag Link Tue Jul 17, 2012
My response will apply in all 50 states and in any situation.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Fri May 25, 2012
Only if you back out of the contact.
0 votes Thank Flag Link Fri May 25, 2012
While the TN purchase agreement does include language that spells out the situations when earnest money is to be refunded (inspection being one) often banks will have purchase agreements that (they say) will supersede the language and law in the state purchase agreements. Whether this is true is anyones guess as I don't know of anyone attempting to challenge it in court.

There are situations in REO / bank owned purchase agreements where the earnest money is not refunded. It all depends on the contract being used to make the purchase and the language within that contract.

I think most of the responders to this question missed the headline 'Foreclosure in 77079"
0 votes Thank Flag Link Fri May 25, 2012
I can't answer that for Tennessee but I sure could for Texas!
0 votes Thank Flag Link Fri May 25, 2012
I haven't heard of earnest money being non-refundable in any state unless the contract states just that.
0 votes Thank Flag Link Fri May 25, 2012
There are times when a contract might be written that way. In the real world, and most of the time, EM can be returned to the buyer for a number of reasons. Your question about "contingencies' is covered in the Texas contract form from TREC. The option period can be used to have your inspections and cancel the contract for any reason. You must watch the time limits and respond within that time limit and in writing to get your EM back to you. Another way to get it back is the Third Party Addendum for Financing - again in TEXAS!- and again watch the time limit for getting your EM back. If you fail to obtain the financing in that time period, the addendum provides for the return. I'm absolutely not an attorney, so these words reflect my experience with TX contracts.
0 votes Thank Flag Link Fri May 25, 2012
Geri in different states like TN and TX the law, court decisions, and contracts are not the same. In Texas the earnest maney can be refunded to the buyers if the reason to cancel is provided for in the contract. Some possible examples are: option period, financing, title, and condition of property.

If you have a specific question make sure you ask a knowledgeable person in the state where the property is located.

Best of luck .. Bruce
0 votes Thank Flag Link Fri May 25, 2012
Good answer Bruce.
Flag Fri May 25, 2012
I am betting that what the instructor meant, was that it is not normally refunded;
which is something very different:

Normally, since the money is in Escrow, it is applied to either the down payment, (which is also in the same account,) or the Closing Costs (which, you guessed it; is in the same account).

All this assumes that the DEPOSIT was given to the Title Company; I understand that sometimes the Deposit is given to the LISTING BROKER or the ATTORNEY, and is kept separate. About that; I cannot speak.

Good luck and may God bless
0 votes Thank Flag Link Fri May 25, 2012
That is not correct. There are several ways in which a buyer will get their earnest money back. Way too many to list.

Diane Hermis
Total Real Estate Services
832-620-6304
dianehermis@yahoo.com
0 votes Thank Flag Link Fri May 25, 2012
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