If the financing fell through for the purchase of a house, how long must I wait for the return of my earnest money?
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If the financing fell through for the purchase of a house, how long must I wait for the return of my earnest money?
I was approved for an FHA loan to purchase a new home. Come to find out right before closing on our new home the loan was denied by the bank. We are currently waiting for our release form and good faith deposit bank from the seller and it’s been a few weeks now. They relisted the house and it’s been back on the market for a couple of weeks now. I feel like there seller is just dragging us along and doesn’t want to give the deposit back because he’s angry the sale didn’t go through. Is this even legal and how long does the seller have to return the deposit and sign the release form.
Asked on September 19, 2015 under Real Estate Law, New York
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
The seller may not have to return the deposit. If the buyer cannot or will not go through with the sale, even if due to factors beyond their control, the seller typically keeps the deposit. In the case of financing falling through, the seller wpuld onky have to return the deposit if there was a "finance contingency" in thr contract--a term or provision stating that if you could not get financing, you'd get your money back. If therr was such a contingency and all its requirements or conditions were complied with, then if the seller will not return the deposit, you could sue the seller for breach of contract for its return.
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