Under what circumstances can you keep the buyer’s deposit?

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Under what circumstances can you keep the buyer’s deposit?

The buyer put deposit down, we extended contract and he was unable to get financed although he was preapproved. I just want to know for the future.

Asked on October 10, 2018 under Real Estate Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If he fails to close by the closing date, you may keep the deposit. When a buyer breaches a contract, including a contract to sell real estate, that breach entitles the seller to retain the deposit as "damages." You do have to give him until the closing date: he has that long to see if he can *somehow* come up with the money and close.


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