If we had a contract on our house and the buyers just terminated the contract and want their earnest money back, do they get it?
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If we had a contract on our house and the buyers just terminated the contract and want their earnest money back, do they get it?
They terminated the contract because they decided they didn’t want the solar system on the house. They didn’t ask us to remove them or do anything about it, they just terminated and want their earnest money back.
Asked on September 1, 2011 under Real Estate Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Earnest money or other deposits only need to be returned to the degree that something in the home sale contract gives the prospective buyer the right to ask for them back. For example, what's commonly known as inspection clause allows the buyer to terminate the sale if significant issues are uncovered during home inspection; a financing clause allows the buyer an out if he/she cannot obtain financing. However, other than as provided in the contract, the buyer may not have the money returned unless there was some material breach of contract or fraud in its inception by the seller. Without breach or fraud, if the contract does not allow the buyer to change his or her mind, which is what indicate happened here ("decided they didn't want the solar system"), then he or she will lose the earnest money or deposit if he or she attempts to terminate the contract.
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