MP, Home Buyer in 33351

Loan did not approve before closing day. What happens to earnest money in case of "AS IS contract"?

Asked by MP, 33351 Thu Mar 4, 2010

Hello Experts,

I am in a situation where my loan did not get approved for the term 10% down i was looking for before the extended day of closing date. The contract is "AS IS". My question is will i get my earnest money back. What happen in this situation??

Please advise.

Regards MP

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Chris Lyon, Agent, Venice, FL
Thu Mar 4, 2010

Your question depends on if there was a contingent dat in the contract. If you were unable to get a loan commitment by the contingent date you should get your deposit back. If it was past the contingency date you may have a problem. Be shure to read your contract thouroghly and consult your realtor. You will also need a denial letter from your lender to provide to the listing agent to prove you were unable to get financing.

This is a prime example why it is important to be Pre Approved for Financing before you write a contract.

Christopher Lyon
Fidelity LLC
1 vote
MP, Home Buyer, 33351
Thu Mar 4, 2010
Thanks very much to all.

my contract is FAR BAR AS IS.
there is a financing contingency in the contract. Loan approval is default to 30 days from last counter offer date. However my contract get passed that 30 days by more than 4 days.

please advise
0 votes
Debra B Albe…, Agent, Port St Lucie, FL
Thu Mar 4, 2010
That depends. Is your contract on a Far-9, Bar/Bar 8 or Far/Bar As Is. All of these contracts are used in Florida and there are differences. Read your contract as to the financing contingencies and make sure that they were satisfied in the allotted time frame. If you have further questions, you should contact a real estate attorney, if your realtor is unsure of the answer for your particular finance question.
I hope this helps you.
Debbie Albert
Coldwell Banker Residential
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Erich Whitem…, Agent, FL,
Thu Mar 4, 2010
As Christian mentioned, "AS-IS" refers to the condition of the property. The earnest money distribution will depend on the contract. If it was a cash offer or not, whether there was a financing contingency and whether the loan you sought met or exceeded the terms of the financing contingency, for excample, if the contingency was max interest of 7% adjustable, and you applied for a 6% fixed, you may not have satified the contingency.

Your agent or broker can advise you based on your contract, but you may need an attorney or an order to have the funds dispbursed. First would be to ask for your earnest money back, supply the denial from the lender, and if needed, have your agent prepare a release for you and the seller.
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Cardenas Gro…, Agent, Weston, FL
Thu Mar 4, 2010

My suggestion is make sure you get a loan denial from your lender and send it to the seller with a release and cancellation of contract with the escrow money payable to yourself. If you applied for a loan and did your best attempt to obtain financing within the time frame stipulated on the contract, most sellers will not give you a hard time signing off on your escrow deposit.

Carlos Cardenas
0 votes
Myke Atwater, Agent, Santa Rosa Beach, FL
Thu Mar 4, 2010
Hello MP--there is normally a "financing contingency" in any contract of purchase. Therefore, you should get your earnest money back. Just ask you agent to fill out a form for the title company requesting the funds, and when they get the signatures from the seller and you, you should get the money back very quickly. Shouldn't be a big issue.

If you have any other questions, do not hesitate to contact me.

Best of luck,

Myke Triebold, GRI, LMC
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0 votes
Christian Dr…, Agent, Mystic, CT
Thu Mar 4, 2010
Typically "As Is" referrs to the physical condition(and sometimes the marketability of title).
As to your issue with financing, there should be a Mortgage Contingency section in your contract.
Contracts vary, so you may need an attorney's assistance, but if the bank has not given you a loan commitment and you notified the bank of such, within the specified timeframe, you may be entitled to your deposit. Otherwise, you may have to surrender it ofr fight the seller for its return.
It is really best to speak with your agent or an attorney on this matter.
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