If we have a signed a contract to purchase a house, can we get our earnest money back if we want out due to a faulty furnance that the seller won’t repair?

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If we have a signed a contract to purchase a house, can we get our earnest money back if we want out due to a faulty furnance that the seller won’t repair?

We are renting a home we have signed a contract to purchase. The home passed inspection prior to our signing the purchase agreement. We are awaiting loan approval. Since signing the purchase agreement/contract the furnace has quit working. The owners/sellers have refused to fix/replace the furnace. We no longer wish to purchase the home. Will we lose the earnest money we put down on the house?

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

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Whether or not you could lose your purchase money for the purchase of the unit you want to buy where the owner/seller refuses to repair the furnace you are writing about depends upon whether or not you have waived all contingencies concerning the purchase of the unit assuming there are contingencies. Such contingencies pertain to ability to get a loan, home inspection, pest inspection, roof inspection and the like.

You need to carefully read the purchase agreement to determine if the agreement in and of itself gives you an out from closing escrow. If so, then you do not need to close escrow.

As to the cost of fixing the furnace, I suggest that you get an estimate for its fix. If the estimate is close to or below the earnest money deposit, you might consider closing on the property if the furnace is the sole issue of concern with the property.


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