real estate…, Both Buyer and Seller in Salt Lake City, UT

If a buyer makes an offer on a home but fails to deliver the Earnest money, what happens to the contract?

Asked by real estate newbie, Salt Lake City, UT Tue Feb 12, 2013

Is the buyer still obligated to purchase the property? Can the seller hold the buyer to the due diligence and financing deadlines? What legal measures exist for the buyer to require that the earnest money be paid?

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Answers

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Good question, because that happens VERY often.

If the earnest money is not deposited as agreed then the Buyer is in Default, and the Seller can probably cancel the contract, or pursue other remedies. But you do not HAVE to.

If the seller wants to keep the buyers around you could ask for the money to be deposited and get an addendum stating that the time to deposit the money was extended, etc...

What the seller (and buyer for that matter) probably do NOT want is to get into a legal battle over earnest money and hold up the sale of the home. The buyer may have other ways of getting out of the contract (such as due diligence, or financing deadlines). But they are in default if they do not perform in depositing the money.

I am not an attorney, but I would think that, if desired, the seller could cancel the contract, and market the property for other buyers. In the Utah contracts used by agents there is a section that lists available remedies in the case of a Buyer defaulting. REad that section and see what can be done.

Micah Olson
801-805-4900
http://www.UtahLoanHelp.com
http://www.EffectiveBuyer.com
1 vote Thank Flag Link Tue Feb 12, 2013
It depends on how far along the process is. If the Buyer is still within the Due Diligence period, then there's not much recourse for the Seller, because the Buyer can just back out for any reason. However, the Buyers are contractually obligated to put that earnest money down. If they never did, they are still legally obligated to do so.
0 votes Thank Flag Link Tue Feb 12, 2013
If the buyer has decided to back out of the contract they can without any EM being in jeopardy but they need to let everyone involved know. If they do not and it goes beyond their due diligence deadline they can still be help accountable for EM to be given etc.

What does your agent say? Does this buyer have agent representation as well. What are they saying?
You may need to seek legal counsel on this if the buyer doesn't perform according to the contract.
0 votes Thank Flag Link Tue Feb 12, 2013
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