If a seller is refusing to refund earnest money, how do I get the money back?

Builder claims that the special order appliances we wrote into the contract had to be returned with a restocking fee of $867. No where in the contract did it state that if financing wasn’t obtained would they get to keep the earnest money for this restocking fee.

Asked on November 30, 2011 under Real Estate Law, Iowa


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Even if the contract had a financing contingency which was not met, the buyers could still be liable for costs they caused the builder to incur by their actions. If you ordered special-order appliances that cannot be returned with the builder incurring some charge or fee, you could be held liable for that fee--it is the fact that you ordered the special-order appliances which potentially makes you liable, notwithstanding the finance contingency. (Similarly, if you, for example, caused some damage to the home while, say, inspecting it, or asked the builder to tear out a wall for you and he did so, you could be liable for those costs, notwithstanding the contingency.)

If you want to try to get your money back, you'd need to sue; you'd need to then show 1) that you did not order special order appliances; 2) that you did not know they were special order when ordered (note: it's not necessary that you knew specifically about the fee--it's enough to be liable that you had the builder order something specifically for you, which did not otherwise come with the home); 3) that they did not in fact have restocking fees; and/or 4) that the builder is charging you more than the actual restocking fee.

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