If a seller releases a buyer from a contract to purchase, does the seller get to keep the buyer’s earnest money?

UPDATED: Oct 1, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Oct 1, 2022Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

If a seller releases a buyer from a contract to purchase, does the seller get to keep the buyer’s earnest money?

I have a contract to buy a house, to close within 60 days. New Link Destination
day is day 46. The
seller has been anxious from about day 14 and has been ‘bugging’ me to close.
Now she says she doesn’t want to sell to me and wants to sign a release and
keep my earnest money. My response is that I have 14 more days to go. I have to
sell my house first. I have a contract to sell but it will take more than 14 days. My
house should close 9 days after the 60 day period. I could conceivably give her
a release but not at the cost of my earnest money Not a fun situation.

Asked on May 8, 2019 under Real Estate Law, Georgia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You have the right to buy as per the terms of the contract, though if you can't close in time, you will be in breach of contract and she may be able to then cancel the contract and keep the deposit. (If the delay is only nine days, that may be short enough so that the breach is not considered "material" or important enough as to actually cancel the contract, though she'd still be entitled to any costs or losses the delay caused her--but be aware that you will be in breach of contract and so would be in a precarious legal position.) But you do have until the closing date to be able to comply and close. If she wants to cancel the sale before that--that is, before you breach--you and she would have to agree mutually to the terms of the cancellation and release. She can ask to keep the deposit; you can refuse and proceed with the sale under the contract (and hopefully close on time). You and she would have to work something out to which you both agree to cancel the contract early. If you are in financial distress or pressure due to your own buyer pulling out, perhaps you want to offer to let her keep some small or nominal amount for her trouble and get out a sale that you may not be in a position to go through with.

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 AttorneyPages.com 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.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption