If your agent won't at least make a reasonable effort on your behalf, ask for their broker. Agents are to be supervised by brokers who are responsible for their actions. While referring you to an attorney is always good advice, there is more the agent can do on your behalf. If they don't realize this, their broker should, so start there first. Let us know how it turns out.
If the loan contingency was not removed and you were not able to secure the loan for whatever reason even though you tried the best you could, you are most likely entitle to having your money returned to you. What is your agent telling you? Escrow cannot release any money to the sellers unless you sign off on it (nor can the escrow officer return the funds to you all that easily). Let us know how things go.
It should work out for you.
If you made a good faith effort to obtain financing and you have a properly prepared financing contingency, you should be fine. Your agent is the one who will know the details better than anyone here, what do they say? Your contract will be the controlling document, so review what it says and ask your agent. If they aren't able to answer, ask their broker or if necessary talk to a Real Estate attorney.
There are some good answers from the agents below. Just want to make sure you are using a good agent. They will watch out for your best interest. When I was a new licensed agent, buying my own house, I used an experienced agent to assist me.
When you say you did not get the loan, do you mean, you did not like the loan options presented to you, or there was no lender able to give you a loan after extensive review of your application.
If on your contract you stated you will get a loan based on a certain interest rate... amortized over a certain period... not to exceed ____ points and there is a loan you could get based on that criteria, but you have just changed your mind, then the seller may have a point... The point is that you could have got a loan, but simply chose not to because you did not like the terms... this is why it is sooo important to get pre-approved prior to making an offer.
Did you remove any contingencies, like your inspection contingency? If you did not remove any contingencies, then you could cancel based on the Inspection/Investigation Contingency... that is virtually for any reason and probably easier than saying you couldnt get a loan....
However, either way, the escrow company cannot just release your money... escrow takes their instructions from fully executed docs signed by both parties. If the seller will not cooperate with the cancellation and recourse for the deposit, you may need to go to arbitration (if you both signed the arbitration clause) First thing I would do is contact your agents manager and get thier opinion after reviewing your contract...
Assuming that you did not willfully misrepresent your financial qualifications to the seller at the time of the offer, and you used due diligence to obtain the loan specified in your loan contingency, then you should be able to retain your deposit, if you were unable to obtain your financing. The escrow company cannot unilaterally release your deposit to you, despite whether you have a liquidated damages clause or not, because release of funds must be mutually agreed upon by the parties. However, during the time while you are negotiating for the release of your deposit, the escrow can be cancelled, the owner can resell the property, and the deposit can be held in a separate escrow account pending release. Courts look VERY unfavorably on sellers holding on to a buyer's deposit without cause; the seller can be penalized $1000 for refusing to return your deposit without a good faith dispute, as per the contract, and courts can go even farther if necessary.
You do not say why the loan failed, and whether you still want to purchase the property. Did you not qualify, or did the property not appraise at value? If you still want the home, I suggest getting all parties together to renegotiate.
If you want to cancel, write a clear concise letter to escrow explaining that you want to cancel escrow based on the loan contingency. Get your agent to negotiate the cancellation for you; that is their job. If they are unwilling, contact their broker or manager, and call the Department of Real Estate if you are not being fairly or adequately represented. And select a new agent prior to your next purchase.
Best of luck,
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
If the other party is not being reasonable, don't be afraid of fighting for your rights, but evaluate the cost-benefit side of it. My staff attorney is a very experienced real estate litigator that understands the best way to resolve issues is to avoid litigation... that is the type of counsel you need to get, and that is why he is in my office to provide complimentary advice to my clients.
Best of luck, and do what is best for you...
Ron Escobar, MBA
Broker & General Contractor
All are good responses below. I just want to add that your attempt at loan approval should have been based on your EXACT financing terms on page 1 of your purchase contract. FOR EX) if your agent wrote in that you're putting 20%, but your loan approval rejection was based on putting 10% down with a 2nd loan for the other 10%, then it would appear you weren't acting in good faith and your deposit might be jeopardized.
I hope this makes sense to all buyers about there. Sometimes there is more to it than meets the eye with the loan approval contingency.
Based on your post, the assumption is that you were acting in good faith, in which case you should be entitled to your deposit back.
Best of luck.
Suzanne (Suzie) Glaser
LA VILLAGE REALTY
p.310.383.1141 | http://www.LAVillageREALTY.com
RealEstateSuz@gmail.com | lic # 01390707
(a division of Power Brokers Int'l | lic # 01520327)
As Jane said....if you still had your loan contingency in place, then your agent should be able to help you get your deposit back, less any reasonable, actual buyer costs. That is the purpose of the loan contingency. The best course of action is to work with your agent and his/her broker on this...and do not sign anything you are uncomfortable with unless you have spoken to an attorney (which might not be necessary).
Good luck and so sorry it didn't work out.
It's really difficult to make these kinds of assessments without all the information, however if you got a pre-approval from a lender without any willful misrepresentation on your part, then got denied on the loan and notified the listing agent prior to the loan contingency expiring (even if you didn't this is a gray area because the C.A.R. Residential Purchase Contract requires written removal), there is no reason I can see for them to legitimately keep your deposit.
You also need to understand how the process works. Assuming the deal is in escrow with a title company, your deposit funds cannot be released to either party without mutually agreeable cancellation instructions. It comes up from time to time when angry, frustrated sellers threaten to keep deposits and sometimes even try, but we have been able to make these situations go away in these few instances by counseling patience to our buyers and working on the listing agent. Sellers frequently cool down when the realities of trying to actually get the money are explained to them. Give it a week or so and let your agent work on it. If you don't have one, a letter from an attorney might do the trick. If your agent is unwilling or unable to do this, go to his/her broker for results.
If you/your agent can't get them to give it back, the C.A.R contract also calls for mediation before pursuing court or arbitration. If there is one party who is clearly in the wrong, a mediator will hammer on them to see the light. This is your best shot before it gets expensive.
The foregoing is all predicated on your statements about the situation, so you might want to consult an attorney as they can tell you for sure once they have all the facts.
Lance King/Owner-Managing Broker
+ unexpired loan contingency
+ notification of lender denial of credit within required time periods
+ active removal clause agreed to on contract
- gross negligence or misrepresentation from buyer
= No reason buyer shouldn't get his money back.
Hoping you've initialed the arbitration clause on the RPA!
Good luck to you!
ps: I also like Jerry Current's answer below. Another note, if you're in escrow currently, the seller cannot complete a transaction with another buyer until you cancel your current contract. It would be to your advantage not to do so until he agrees to return your full deposit.
Allan S. Glass
ASG Real Estate Inc. Â®
149 S. Barrington Ave, Suite #660
Los Angeles . CA 90049
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