Will I lose my earnest money deposit?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Will I lose my earnest money deposit?
I am currently in escrow for purchase of a property in California. My agent communicated to me in writing that I was approved for a loan and to remove the loan contingencies, which I did. Later, I found I was only conditionally approved, and one of the loan conditions cannot be met.
I have alerted my agent and the first lender to the loan condition that cannot be met. The first lender suggested that I falsify documentation to meet the condition which I have no intention of doing.
I have found a second lender that can provide the loan without the first loan’s condition, however the seller’s agent is not letting another appraisal take place.
My agent is now telling me in writing that I need to go with the first lender or I will lose my earnest money and the property because I could not close on time with the second lender. I would only like to close on the property and have no intention of walking away from the deal, which I can do if I just use the second lender, but this may extend escrow. What is my recourse?
Asked on February 26, 2016 under Real Estate Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
If the delay is only a week or two, you can still most likely force the sale to go through, unless the contract of sale stated that "time was of the essence" in the transaction, since generally, a delay of that length of time, when time is not of the essence, would not be held to be sufficiently "material" or important as to breach the contract. Of course, if the seller refuses to go through, you may have to go to court to get an order to compel him to do so, and could end up having to pay some damages or compensation to him for your delay, especially if the delay caused him to incur any losses or costs. (And also: while you'd have a good chance of winning giving a short delay, winning is not guaranteed or automatic--you could lose and be held in breach.) Offering to pay him for his additional costs and inconvenience, in order to secure his agreement to a new closing date, may be a good strategy.
A delay of several weeks or more would very likely be a breach of contract. If you are in breach, you lose your earnest money and don't get the house.
If the agent committed malpractice--i.e. was professionally negligent, or careless--you could potentially sue him/her for your costs or losses caused thereby.
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 AttorneyPages.com 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.