What to do if we signed a contract for purchasing a new home in but due to our situation had did not continue and cancelled the contract 2 months later?

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What to do if we signed a contract for purchasing a new home in but due to our situation had did not continue and cancelled the contract 2 months later?

This was about 1 1/2 years ago. We had paid the earnest money as part of the contract. We have been contacting the seller for the refund and the seller is not refunding the money back. Is it possible to get the earnest money back in this situation?

Asked on January 7, 2013 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If you contract to buy a home and then do not go through the purchase, the seller is entitled to keep the earnest money or deposit unless--

1) You cancelled the sale pursuant to some provision in the contract giving you the right to do so--for example, if there had been a finance or inspection contingency, and you properly exercised your right to cancel under that contingency.

2) The seller did something causing the sale to fall through--for example, the seller  was not ready to sell on the closing date.

Other than as the above, however, the seller is entitled to keep the earnest money as compensation for your breach of the contract of sale.


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