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Earnest Money in Colorado

Hi All,

Our inspection objection deadline is a few days away.  We are very disappointed to find the house we have under contract has foundation and furnace issues.  The foundation issues are too much for us to consider moving forward with the house.  We are going to tell our realtor today we want to terminate the contract.  Our realtor knows we are not happy with the outcome of the inspection and has spent the last several days trying to convince us we should move forward anyway.  I asked him about getting our earnest money back and he basically avoided the question.

So I thought I would come here - in Colorado, if you terminate the contract after an inspection but before the inspection objection deadline, do you get your earnest money back?  Do the Seller's have to agree to give it back?  If they don't, what happens?  I read our contract and to me it looks like we have every right to terminate and the Seller's have 3 days to sign the form agreeing to give the earnest money back.

Thanks in advance!
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September 03 2013 - US
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Answers (3)

Profile picture for user93757775
Hi All! I just wanted to follow up for future readers with a similar question.  The Buyer did sign the earnest money form and we received our earnest money the following day from the title company.  It was a seamless process even though there was the "what if they don't sign" fear in the beginning.
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September 13 2013
Hi - the inspection objection form used to include a checkbox to terminate the deal. The current form has buyers ask for corrections to be made. I would encourage you to ask for the correction; the sellers will either make them because they won't be able to sell the house to anyone else without them, or they will want to terminate the deal.  More likely, they'll come up with some kind of compromise and you'll then be able to decide if that's sufficient for you.  Bottom line - if you don't come to some kind of mutual agreement, the contract will terminate and you will get your earnest money back.
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September 03 2013
Earnest money is pretty much the same everywhere so I feel I can answer somewhat. Earnest money is held and can only be given back to the party that both parties agree to give it to. The company holding it can't just decide. The first step is to terminate the contract and get signatures from the seller. This should include something about returning the money. The problem occurs when a seller is mad and won't sign, but that will prevent them from selling the house since they have not terminated. It can get sticky and sometimes a lawyer is required to write a letter to the seller explaining all this. Hopefully they will sign and the money will be released.

tim
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September 03 2013
 
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