Usually the contract is written with the contingiency of the buyer securing a mortgage. Since your buyer did not secure the mortgage, their deposit would most likely be refunded. Your attorney is the one to advise you with the wording of your contract.

This may not be as dismal as it seems. I had a home in contract, and the buyer could not secure a mortgage after several extensions. When we put it back on the market last month, my homeseller got $15K more. There is a rush to close before 11/30/2009, to get the $8000 tax credit. Put it back out there immediately if not sooner. Good Luck.

Carol Bromm, SRES, CBR
Associate Broker
Prudential Douglas Elliman
631 860-1312

This is a good one. Arlene, you must consult with your attorney to get a direct answer to your question. A lot depends on the terms stated in your contract.

Generally,
If contract states that you are entitled to funds + purchaser agrees= funds may be released to you.

If contract states that you are entitled to funds + purchaser disagrees= funds may not be released to you.

An attorney is not able to release funds held in escrow, to either party, if there is a dispute over entitlement to said funds. The funds are placed with the court and the parties engage in litigation or reach a settlement.

There are other alternatives and considerations which are beyond the scope of this Q & A forum. Hope this helps a little. All the best.

Now, my Disclaimer:
I am a real estate broker, but I am not your real estate broker. I am an attorney, but I am not your attorney. Therefore, I do not owe you a fiduciary duty, and no attorney-client relationship has been formed. This is not legal advice. You should verify any and all information provided to you.

Arlene,

This is a great question for your Attorney and/or Realtor representing you in this transaction... What was their advice? If there was not a Financing Contingency in the Contract, then you may be entitled to keep the Earnest Monies.