How long does an attorney have to give back a down payment on a real estate contract after the contract has been canceled?

UPDATED: Dec 21, 2011

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How long does an attorney have to give back a down payment on a real estate contract after the contract has been canceled?

I recently entered into a contract to purchase a co op but was declined by chase for a mortgage. I had provided the seller’s attorney a 10% down payment check. I informed the seller’s attorney of my intent to cancel the contract due to not being provided a mortgage prior to the downpayment check being cashed. He asked it anyway and it’s been a week. I have not heard from him or received my cash back. I sent him an email asking him if he plans on sending the money back and he told me i have to go through a lawyer for questions. I do have a lawyer that I retained for the co op purchase but he is completely unresponsive. what are my rights here and how long does the seller’s attorney have to keep my funds especially since they didn’t have a right to cash the check after I already informed them of my intent to cancel? And can they legally keep my money?

Asked on December 21, 2011 under Real Estate Law, New York


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Whether or not you are entitled to the return of your deposit depends upon whether or not you waived all contingencies concerning the purchase of the unit or not. You need to carefully read the written purchase contract regarding the purchase of the unit and your entitlement to get its return due to the failure of getting loan approval.

If there is a formal escrow established for the transaction, I would e mail the escrow officer seeking its return advising that the escrow has been cancelled by you. The time period for the return of any allowable deposit back to the buyer is typically spelled out in the purchase agreement.

I would call and write the person who holds the deposit (escrow or the attorney) one more letter seeking its return by a set date. If not returned by then and if the attorney is handling the escrow has the money in his or her trust account has not responded to your inquiry, you might consider making a state bar complaint as to him or her.

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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