Could a buyer lose their escrow deposit?
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Could a buyer lose their escrow deposit?
About 4 days prior to closing on a house, the lender informed me about the denial of the down payment assistance program, in this case $15,000. Thus leaving me with insufficient funds for the down payment and closing. After been forced to cancel the purchase, can I lose the money put in to a escrow account by the title company?
Asked on August 6, 2017 under Real Estate Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
Yes, if you cannot go through with the purchase, even through no fault of your own, you loose your deposit. The purpose of the deposit is to compensate the seller for the lose of the sale. The only time you would get it back is if the *seller* caused the sale to fall through--e.g. they were unwilling or unable to sell to you; in that case, the deposit would be returned because they cannot cause you to lose the house but still keep your money. But if they weren't at fault--even if you, too, were not at fault, and it was due to some third party (like the lender) or other circumstances beyond everyone's control--the seller gets to keep your deposit.
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