Whendoesthe deposit for the purchase of real estate become at risk?

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Whendoesthe deposit for the purchase of real estate become at risk?

I’m selling my house and just went into escrow. I’m considering making an offer to buy a house contingent on my current house closing escrow. Once I get into contract on the house purchase, if the house I’m selling falls out of escrow and I’ve already signed off on the typical contingencies on the house purchase, would I have to forfeit my earnest deposit?

Asked on July 22, 2011 California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Typical contracts for real estate spell out when one's deposit can be lost if the purchase does not go through. That is why it is very important to have contingencies in place such as inspection approval and in your case, making the pruchase of the home you want contingent upon the sale of the home you are living in.

If you waive all contingencies before escrow is slated to close on your purchase, and the escrow does not close for reasons that you now have, then the deposit that you placed is at risk to be lost to the seller due to your inability to close.

As long as you do not waive the close of escrow contingency on your other house requirement before close of escrow on the house you want, your deposit money should be returned to you if the first house does not sell in the stated time assuming the seller accepts your written contingency.


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