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Seller and Ernest Money

We received an offer for our house but the buyer could not get her loan approved. The closing dates was extended around 4-5 times waiting on her financial institution to approve the loan but that never happened. We just received a copy of the letter from her bank where they stated that they could not approve her for the loan; in this case do we (seller) get the Ernest money to cover part of the repairs done during inspection?  Or does the buyer get it all?

Thanks. Will

  • August 20 2013 - Houston
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Answers (6)

Your contract should stipulate if their was a financing contingency and for how long.  If they exceeded the number of days allotted to obtain financing and did not close, the Earnest money could be forfeited to the Seller. You should consult with your Realtor or attorney regarding the particulars of your contract.
  • August 20 2013
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Your realtor or attorney should advise you.   It will or should be stated in the contract.
  • August 20 2013
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Usually in CA, this may be different in different areas. But, key is after 2nd extension, your "listing agent" should advise the buyer's(buyer's agent) to execute removal of financing/loan in conjunction with earnest money release.  
  • August 20 2013
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Profile picture for Owens Realty Group
Hi Will, Do you have a Realtor that you have been working with? The would have been a Third Party Financing Addendum that laid out a period of time a buyer had to obtain financing. If they could not obtain financing within that period and you did not sign an Amendment extending that period then you are entitled to the Earnest Money. Have your Realtor draw a Release of Earnest Money that you can sign and have the buyer sign, then send to the title company to deliver the funds to you. I hope this helps. Best of luck! 
  • August 20 2013
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Profile picture for DamonGettier1
Like Andy said, the answer is in your contract.  The fact that there were 4-5 extensions needs to be a warning that this buyer or this bank is not in the position to make this deal happen.
  • August 20 2013
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It depends on your contract.  In California the Seller would only get the earnest money deposit if the Buyer removed the contingency and then failed to close.  In this case a loan contingency.  Check the contract you signed and talk to your agent.
  • August 20 2013
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