Am I entitled to a return of my earnest money deposit if I didn’t get financing approval?

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Am I entitled to a return of my earnest money deposit if I didn’t get financing approval?

I signed a purchase agreement on a home giving a $6,000 earnest deposit on a $239,900 home and also paid full asking price due to realtor saying that was the best option. We just noticed the financing clause was removed from the agreement and also no dual agency form was given to us or discussed with us even though she was the sellers realtor. We leased the home for 1 year to work on our credit but did not end up with financing approval. Can we get some of our deposit back? It does state in agreement that we are buying it with a new mortgage of 97% of the price?

Asked on February 27, 2012 under Real Estate Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If there was no financing contingency--i.e. no term in the agreement providing that in the event of a failure to obtain financing, you would receive your deposit or earnest money back--then no, you most likely are not entitled to a return of it. You state that you "just noticed" that the financial clause was removed from the agreement; however, unless that clause was removed subsequent to (after) you signed the agreement (e.g. someone changed or modified the agreement after you signed it), you would still be held to the agreement as you signed it; people are presumed to read contracts before signing them, and cannot plead a failure to read or notice something as a defense to their obligations thereunder. On the other hand, if the seller  or seller's agent removed a financing contingency or financial clause after you had already signed the agreement, then you should be able to get  your money back and may also have grounds for a lawsuit for other damages or compensation.


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