Home Buying in 90005>Question Details

Tki, Home Buyer in Los Angeles, CA

Can I get my deposit back if I was unable to get a loan from the bank? there was a loan and lease contingency

Asked by Tki, Los Angeles, CA Tue Mar 24, 2009

I signed into an escrow agreement and the two contingencies were the loan and lease contingencies. I turned in my loan application 3 weeks before the close of escrow but the sellers failed to turn in their completed loan application until 3 days before the close of escrow. The seller and broker were the ones that chose this bank and wanted me to go to other banks 2 weeks before the close of escrow because they knew that i would have been rejected for the loan based on the income statement the sellers submitted. During escrow I had changed my mind and did not want to buy the business, so I chose not to go to another bank until i got the rejection from the first bank. I chose not to go to another bank because if I were approved than i knew i would have lost my deposit. Am i entitled to my deposit since I applied at the bank of their choice and got denied for the loan? What should i do if the sellers refuse to sign the closing instruction?

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The CAR contract has time frames in which to meet all your requirements for the contingencies. As long as your agent kept you in those time lines, even asking for extensions to meet those deadlines, then you would be assured to get your deposit back. The loan is NOT a contingency of this contract and I know many agents will argue that it is. If you submitted a pre-approval letter with your offer per the contract, then getting a loan isn't an contingency.
0 votes Thank Flag Link Wed Jun 30, 2010
The way you phrased your question is a little misguiding, but like Jefferson, I am under the impression that your agent is also the sellers agent. Now your loan has nothing to do with the sellers financials so it doesn't really matter what they turned in or didn't turn in. The reason you didn't qualify is simply because you didn't qualify.

You should be able to go to escrow and let them know you want to cancel due to not qualifying for a loan, take a copy of your purchase contract showing the contingency period, have them draw up a cancellation and sign it. Please make sure you do this as soon as possible as you don't want any more delays.

Good Luck
0 votes Thank Flag Link Wed Mar 25, 2009
Hi Tki,

Oh gosh. I hope that I understand all that. Your buyers agent really is the one to ask this to - or your real estate lawyer if you have one. It sounds like it might be that your agent might also be the sellers agent ... that's not a great thing for you.

So I can be entirely wrong here but it sounds to me like the contract will default since you didn't get the loan. And in this case, you should get your deposit back. I'm not personally aware that the seller can require you (unless the contract specifies otherwise) to continue shopping for a loan just because they want you to.

In theory you have fulfilled your end - you applied, were denied, and that should give you a clean out.

But ... again - talk to your buyers agent asap. If the buyers agent also represents the seller (like dual agency) then I'd be wary of being forthcoming with him/her - and talk w/ your attorney - or get a quick free consult with one if you don't have one currently.
0 votes Thank Flag Link Tue Mar 24, 2009
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