Am I A Victim,
Unfortunately, the answer to your question cannot reliably be provided with the information you have mentioned It is necessary to first establish some extremely important details about the transaction before anyone can knowledgeably talk about them.
Let me first start by stating that I mention to any buyer interested in a HUD home to expect a 100% loss of their Earnest Money in the event they decide not to close on the home. I do this for 2 reasons:
1. If the buyer shies away after hearing something like that, than in the unlikely event their Earnest Money is deemed non-refundable, I do not want to be the agent that never told them it could happen.
2. Seeing as I have yet to have any buyer back away from purchasing a HUD after giving my brief, "Take it or Leave It â€“ Say goodbye to the Earnest Money if you donâ€™t closeâ€ moment of truth type of disclaimer, I can only speak for myself when saying out of the 20 or so HUD homes I sold in 2009, I had 1 investor cancel a contract (they lost 100% of their earnest money - as it clearly stated in the FORFEITURE OF EARNEST MONEY ADDENDUM. I had 3 buyers who bid as Owner Occupants (2 of which cancelled long after the "Contingency Period" and 1 during their Contingency Period; all of which received a 100% refund of their Earnest Money Deposit. The likelihood of an Owner Occupant, financed buyer losing 100% of their Earnest Money because of cancellation of contract is rarely the case let alone HUD deciding to get â€œsue happyâ€ and wasting time litigating the hundreds of purchasers that decide to cancel a HUD contract each week.
So this brings us to our first detail to iron out . . .
1. Did you purchase as an Investor or Owner Occupant? 2. Are you paying cash or financing? 3. Was the property considered by HUD as Insured/Insured with Escrow or Uninsured?
If you answered Investor, cash, Uninsured, you can practically guarantee that your Earnest money will be forfeited in the event you donâ€™t close (as was the case with my investor scenario above).
Our next set of details however is really detrimental to the facts at hand.
Iâ€™m not sure it is clear, at least not to me, the exact reason you want to cancel. Was it due to the unfortunate passing of your parents? If yes, than you do have certain rights. Did you just decide this was not the right time for you? First of all, just as a little insider information, even if this were the case, why would you document it as such? Iâ€™m not telling you to fib of course, but I rarely run into a buyer or a REALTOR for that matter that would settle on the reason for not buying a new home being, â€œJust Because.â€ However, if itâ€™s all you have to work with, this is another way you practically guarantee that you will be waiving farewell to your Earnest Money.
Another unclear point that makes a WORLD of difference:
Which home flooded? Was it The HUD home that you hadnâ€™t purchased yet that was previously un-flooded or another home altogether?
In the event such an event does happen and is recorded to take place after an bid was accepted, even the supposed â€œpractically guaranteedâ€ group that lose their Earnest Moneyâ€ now have some recourse if in fact the property sustained such substantial damage. HOWEVER, if you are trying to claim damage or a material defect that is clearly visible (that you can rest assured HUD already listed as existing), then we get into a bit more sticky situation and bring to light the differences of an OPTION PERIOD & a CONTINGENCY PERIOD and nicely flows to our conclusion.
A HUD 15-DAY CONTINGENCY PERIOD IS NOT THE EQUIVALENT TO A TERMINATION OPTION AND IN NO WAY CORRELATED TO THE OPTION PERIOD which usually only apply on TREC promulgated forms an apply to NON-FORECLOSED homes. As stated previously in this post and in the Procedures Manual that explains the specific requirements, disclosures and order of events provided by HUD and required for all agent to read in order to allow them the opportunity to explain, represent and bid on HUD homes for their clientâ€™s, even before your bid was placed by your agent, you would have had to complete, agree to & sign all appropriate HUD required Addendums; including FORFEITURE OF EARNEST MONEY ADDENDUM as it was something your Realtor should have in fact provided.
The actual addendum that applies to all HUD sales & Earnest Money can be found at http://www.firstpreston.com/documents/FEMP.pdf
Finally, anyone who might suggest you contact an attorney is unfortunately unaware of how HUD contracts read & work. Any agent not fully versed and in complete understanding of the contracts they have others agree to have absolutely no right or reason to be writing contracts at all.
I hope this help explains your options a bit better.