Does the seller have a right to retain my deposit, if I didn’t qualify fora home loan?

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Does the seller have a right to retain my deposit, if I didn’t qualify fora home loan?

I was pre-qualified by the builder’s preferred lender and with that pre-approval I went ahead with signing the purchase agreement. After signing the purchase agreement, the lender stated that I don’t qualify to buy the home. When I went to go cancel my transaction the builder requested a loan application and the credit denial letter so they can return my deposit. I requested that documentation from the lender but never received the credit denial letter and received an unsigned loan application, filled out by one of their employees incorrectly.

Asked on September 22, 2011 under Real Estate Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If you were in contract to purchase a home but were unable to purchase it due to your inability to obtain the necessary loan to close escrow, you need to carefully read your purchase agreement for the property in that its terms and conditions set forth the obligations owed toyou by the seller and vice versa in the absence of conflicting state law.

If you did not waive all of your written contingencies to close escrow such as the loan contingency (requirement that you have a loan to buy the property) you should have every right to get your earnest money back.

The best way to answer your question is to read the provision regarding the return of your deposit to purchase the property.

Good luck.


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