How to get the return of earnest moneyfor a cancelled real estate purchase?

UPDATED: Jan 14, 2012

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How to get the return of earnest moneyfor a cancelled real estate purchase?

We are in a contract to buy a house, we asked the seller the location of the well and was told it was suspected to be in the front yard and the septic in the back. After we had a home inspection done the inspector couldn’t find the well due it not having a well head above ground. Our contract had a contingency on the exact location of the well and septic. After our second home inspection response before the seller signed it, he disclosed to our realtor that the well and septic had finally been located and asked our realtor if we were OK with the location due to both of them being in the backyard. While the well is approximately 70 feet from the septic there is no way it can be outside the required 50 feet from the leech field, so as soon as we found this out we requested a mutual release from the contract and requested are earnest money to be returned. Now the seller wants to keep our earnest money. Can he legally do this?

Asked on January 14, 2012 under Real Estate Law, Indiana


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The answer to your question depends on exactly what the contingeny(ies) in the contract said. That is, what did it allow you to do if the well and septic were too close to the leech field? If there was an inspection contingency separate from the well/septic contingency, what did it say? Did the time to exercise your rights under any contingency expire?

If per the contingencies you could terminate the sale without penalty, the seller should have to give you your earnest money back. If he does not, you could sue him to enforce your contract rights. If in doubt as to your rights or what the terms of the contract mean, bring it to an attorney to review it for you.

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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