house sale fell through, who gets deposit (phila)

Asked by Linda, Philadelphia, PA Tue Oct 23, 2007

night before settlement, buyer backed out because of some financial problem, who gets deposit....

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Patti Pereyra, , Chicago, IL
Tue Oct 23, 2007
It depends.... had the financing contingency been removed when they backed out? If so, you stand a good chance of keeping the deposit and even suing for specific performance. If the sellers had until the closing of escrow to obtain financing, the contingencies then were not officially removed and they may very well get their deposit back.

Without more information from you regarding contingencies and contract specifics, it's difficult to say. Either way, nobody has the deposit now -- it is being held in escrow and cannot be released without consent. Looks like your attorneys will have to duke this out per the terms of the contract.

Good luck, Linda.
2 votes
Donna Saylor…, , Malvern, PA
Fri Oct 26, 2007
If the buyer signs off on the release giving you the deposit then the answer is easy. Otherwise you need to call your agent and find out EXACTLY why the buyer chose to back out. What kind of financial problem was it? You have the right to know. Was the buyer protected by a contingency? With a financial issue, the most likely contingency to look at would be the mortgage. Did they opt for a motgage or was this to be a cash deal? If they waived the mortgage contingency then you may have strong rights to retaining the deposit.

If the buyer elected the contingency then the next question is "Was the mortgage obtained for settlement?". Even if a mortgage commitment was received from the lender there is still the possibility for the loan to be declined up to the time of settlement. Changing circumstances such as a job loss will alter the buyers ability to qualify for the loan. If the buyer is unable to obtain the loan within the parameters set in the mortgage contingecy then, as stated in Paragraph 6(D){4}...(if a standard PAR Agreement of Sale was used), the deposit monies will be returned to the buyer. If the mortgage came through but the buyer did not have the money he was responsible for (perhaps his dog ate the certified check) then the buyer would be considered in default and the deposit money should go to the seller (split with the listing broker per terms of listing agreement).

And in the end it will still come down to what is negotiated between the parties in order to get everyone to sign the release form.
1 vote
Ruthless, , 60558
Tue Oct 23, 2007
The worst news is if your agent gets the deposit. Not only do you need to read the house sale contract, but also read your listing agreement contract. But Patti is right, until it's duked out, no one gets it.
1 vote
Linda Paone, , 18411
Tue Oct 30, 2007
Was the seller refused financing? Or did they just get cold feet? If mortgage commit was in place what happened? There are a lot of questions that need to be answered before someone can tell you who would be in the red And, your realtor should be able to guide you.
0 votes
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