Home Buying in Peninsula>Question Details

Michelle, Home Buyer in San Francisco, CA

Can I get out of a contract and get my deposit back?

Asked by Michelle, San Francisco, CA Fri Jan 9, 2009

I made an offer on a new condo development over a month ago. My earnest money was deposited and I'm currently in escrow. The close of escrow is end of February at which time the units will be ready for move-in. The developer required a pre-qualification from their preferred lender before the offer was made. That wasn't a problem (back in Nov), however now the developer is requiring a loan approval but the banks have gotten stricter with their new mortgage guidelines that went into effect in 2009. The banks now require a higher down payment and higher credit score to get the financing I once qualified for two months ago. I cannot clear this higher hurdle in the short-run. I don't want to extend the close of escrow date. Is it possible to get out of the contract and get my deposit back given that the banks requirements have changed and thus changed my ability to get a loan approval? Thanks in advance.

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6
you need to check your purchase and sales agreement and see what the date is for your contingincy on obtaining financing. you may want to consult your buyer broker or a real estate attorney so they can give you an oppinion based on what you have signed. good luck working things out Susan.
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Fri Jan 9, 2009
Thank you all for your response. The contract does have that contingency but the window in which to get the earnest money due to a failed loan approval has passed as it was only for 30 days. I'll see if I have any options with the developer. Thanks again.
0 votes Thank Flag Link Fri Jan 9, 2009
Hi Susan.
Let me first state that I am a Realtor, not an attorney.
My suggestion would be to review your contract and check with your realtor who represented you in this purchase.
If you were not represented, then check over your contract. In a standard offer to purchase, the terms of the conditions under which earnest money is to returned. In a standard offer to purchase, the inability to obtain loan approval is a valid reason to cancel the offer & obtain the refund of the earnest money.
If the developer required you to use that lender, there may be an even stronger case to obtain your refund.
Another option would be to explore other lenders. If you would contact me, I could put you in touch with several excellent lenders that are local, real-live lenders, (not out-of-state, cyberspace lenders) who may be able to assist you.
John Wirsing
Keller Williams Realty Greater Cleveland
440-487-2193
0 votes Thank Flag Link Fri Jan 9, 2009
Yes, you probably can. In Ohio, most contracts have a loan approval and a home inspection contingency. Notify the seller, or your realtor if you have one, that you no longer can get a loan under the terms you made the offer under. Start there and see what they tell you. You should be fine! Good luck.
Web Reference: http://www.liveinakron.com
0 votes Thank Flag Link Fri Jan 9, 2009
Thanks for your response Randall, but unfortunately, I don't think there is such a contingency in this contract.
0 votes Thank Flag Link Fri Jan 9, 2009
Susan - have your agent check your contract as most contracts have a financing contingency cause that if you now longer qualify or if things change, you can back out and get your earnest money back. Hope that helps,

Randall Sandin
843-209-9667
rsandin@carolinaone.com
0 votes Thank Flag Link Fri Jan 9, 2009
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