Home Buying in Washington>Question Details

Dee Brown, Home Buyer in Washington, DC

If I write a check for earnest money to my agent's agency and decide not to go forward with the purchase, will the money be returned to me?

Asked by Dee Brown, Washington, DC Sat Feb 9, 2013

Is there any situation where my earnest money can be lost?

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Once your offer is ratified by the seller, you are committed to the transaction--if and when the contingencies specified in the contract are satisfied. The EMD check is deposited after the contract is ratified. If the ratified contract becomes void due to a contingency, the EMD can be retained by your broker and applied to an offer on another property.
Santiago
0 votes Thank Flag Link Sun Feb 10, 2013
If you already wrote up an offer and it has been accepted by the buyer then I would talk to your agent and see if you can walk away at this point without losing your earnest money.
1 vote Thank Flag Link Sat Feb 9, 2013
Your agent can discuss your specific situation with you. Whether your earnest money check is written out to the agent's real estate brokerage or a settlement company, it will follow the same rules--essentially, what does the contract say? Most contracts have at least one or two exit points where you can void the contract without penalty, but you don't have endless "free outs." If you're buying a condo/co-op, one free out is review of the association disclosure package. Another sort-of-free out can be a home inspection or financing contingency. At some point in the transaction, your free outs are history and either you go forward with the purchase or you negotiate with the seller about the disposition of the earnest money. Take the home purchase decision seriously, do your homework before signing a contract, and then proceed with the intent to buy the home (barring serious surprises).
0 votes Thank Flag Link Sun Feb 10, 2013
Hi there,

If the contract has been ratified (all parties agree, sign, initial and deliver) then your check must be deposited within 48 hours by law. To get it back you can cancel the contract under one of the contingencies. The first one is usually home inspection. You don't really have to give a reason, just have your agent stop it under that contingency and your EMD can be returned after both parties sign a release.

If it's a condo, then you can cancel under the condo resale documents contingency. Again, no reason need be given.

If you've gone past the first ones, then you will have to rely on one of the other contingencies such as financing. If your financing cannot be completed - for any reason - then you can cancel under the financing contingency.

Where your EMD can be lost is, if you are past all your contingencies and you default on the contract, ie: fail to perform or go to settlement. If that's the case, then you can lose your EMD funds. If you are having a hardship such as family emergency, health issues, loss of income, etc. then the seller could let you out of the contract - if they want to - and your EMD could be released back to you. In that case though, it's up to the seller if they want to give you the EMD back.

Hope this helps.
:)
Kelly
0 votes Thank Flag Link Sun Feb 10, 2013
I'm sure your agent discussed with you the contingencies that would void your contract. You do need a valid reason to void your offer and that would be established in the contract. Then there is a form to be filled out requesting the refund from the brokerage with the reason for the refund. It is the broker's discretion on returning the deposit but unless there is default involved the broker has no right to the deposit.
0 votes Thank Flag Link Sat Feb 9, 2013
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