Whatt o do if my wife and I failed to close on our house due to the FHA 90-day flip restrictions and now the seller wants our earnest money?

They say that regardless of why we still failed to close. We signed an amendment to a contract extension stating if the buyer failed to close, the seller would get the earnest money, but the amendment was drawn up due to their suspicion about our financial ability to close. Financially, we were through underwriting. The loan didn’t clear because of the FHA rule on 90-day flips. Do they have the right to our earnest money?

Asked on September 19, 2012 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the purchase agreement or contract of sale (or an amendment to it) stated that the seller could keep your eanest money if you failed to close in time and you did in fact fail to close in time, then the seller may keep the earnest money unless it was something the seller did which caused the failure to close. If the seller was not responsible for the failure, then generally any failure--a failure for any reason--will allow the seller to keep the earnest money


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