do you have to return down payment money if they back out of sale

UPDATED: Sep 30, 2022

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do you have to return down payment money if they back out of sale

we was given earnest money to refrain from continue selling our home and to hold it for this lady till she got her check, now she wants her money back and does not want to buy thee home. she made out an agreement paper unnotirizedfor all parties to sign and I still have in my position and is now threating to take me to court for the return of her money.

Asked on March 18, 2016 under Real Estate Law, Indiana


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

You only have to return the money if--
1) You were the ones who pulled out of the sale or caused it to fall through; 
2) The sale falls through and becomes impossible due to reasons beyond your or her control (e.g. the house burned down, so you can't sell it to her);
3) The agreement between you and her (e.g. the contract of sale) specifically stated she could get her money back under certain circumstances--and those circumstances exist. 
Other than as the above, when a buyer gives a deposit and then does not carry through with the purchase, the seller can retain the deposit.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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