Can I get my earnest money back from a builder?

UPDATED: Oct 1, 2022

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Can I get my earnest money back from a builder?

We signed a contract to build a new home on March 28, 2018 with Fischer Homes in
Cincinnati, Ohio. We received notice a few weeks ago that our financing is no
more. We sent the denial letter to Fischer Homes and they have agreed to
terminate the contract but refuse to give back the 11,000 earnest money. Is
there any way to get that earnest money back?

Asked on August 21, 2018 under Real Estate Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You are only entitled to the return of your earnest money if there is a "finance contingency" or similar clause in the contract permitting you to terminate the contract without penalty in the event you can't get or lose financing, and you fully comply with such provision's terms.  Otherwise, if you cannot or do not close for any reason, including a lack of financing, when the seller was ready and wiling to go ahead, the seller may keep the earnest money. The entire purpose of earnest money is 1) incentivize the buyer to go through with the sale, because he/she has money at stake; and 2) to give the seller a reason to take the deal and stop trying to sell the property to others by guarantying them at least some payment if the buyer defaults.
If you do have a finance contingency or similar provision and are in compliance with it, so that under the terms of the contract, you should get your money back, if the seller will not comply, you can sue them for "breach of contract" for the money.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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