What to do if earnest money has not been returned on a cancelled home sale?

I cancelled the purchase of a home 6 years ago within the allowed window and the seller refused to sign the cancellation agreement and the earnest money was never returned. I found out the home sold recently and had incorrectly assumed the earnest money would be a lien against the home. I contacted the seller’s agent and he told me I had done a

Asked on January 3, 2018 under Real Estate Law, Minnesota


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

You may have a claim against the seller for failure to return the earnest money: if you cancelled within the allowed window for cancelling without penalty, the seller had to return (i.e. had to instruct the agent to return) the money. It is the seller, who you were in a contract with, who is liable for the money and who you would sue.
But if you wish to pursue this option, do so IMMEDIATELY! This would be an action (lawsuit) based on contract--that is, on the contract or agreement to buy the house. The "statute of limitations" is the time period within which you *must* file a lawsuit: if you fail to file it in time, you are forever barred from suing. In your state, for a case based on contract, the statute of limitations is six (6) years; therefore, depending on exactly when you cancelled, you may or may not be out of time to sue (you write that this occured 6 years ago; you had 6 years from when the seller was supposed to return the money to bring the lawsuit). If you are still in time, you want to file the case immediately and not let more time go by.

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