What to do if our earnest money is being held?
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What to do if our earnest money is being held?
We put an offer in on a home. It was accepted and we put $2000 earnest money down. We informed our agent at day 19 that we were not approved for a loan. Instead of informing the sellers of our denial, or extending our 21 day financing clause, she said she would get someone else to approve the loan. That fell through and now we are fighting the sellers for the earnest money. Even half of it. But they don’t even know that we had informed our agent about being denied in the first place. What do we do? I have called the title company and they don’t get involved. We are first time homebuyers.
Asked on June 7, 2012 under Real Estate Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
From what you write, there was a finance contingency, but you never informed the seller or the seller's agent (if there is one) within the time period of the contingency that you did not obtain financing. Notifying your own agent does not count--she is your agent, not the seller's, and the seller is not bound by her actions or representations. So from what you wrote, you failed to exercise your rights under the financing clause, and so have no right to the return of the money from the seller.
You may be able to sue your agent (and/or her firm), based on her professional negligence--her unreasonable failure to notify the seller and either get an extension of time or cancel the transaction--and recover the money from her.
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