Under what circumstances can you keep the buyer’s deposit?
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Under what circumstances can you keep the buyer’s deposit?
The buyer put deposit down, we extended contract and he was unable to get financed although he was preapproved. I just want to know for the future.
Asked on October 10, 2018 under Real Estate Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
If he fails to close by the closing date, you may keep the deposit. When a buyer breaches a contract, including a contract to sell real estate, that breach entitles the seller to retain the deposit as "damages." You do have to give him until the closing date: he has that long to see if he can *somehow* come up with the money and close.
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