Refund earnest money

[fastspinecho]

What is the name of your state? Illinois

My in-laws recently retired and were somehow convinced to buy a unit in a "luxury condominium" that is still under construction. The price of the unit was $300K, and they put up $10K in earnest money. Their loan was recently approved.

Now, at last, they are finally beginning to realize that they made a mistake. They would like to back out of the deal, but their agent told them they would forfeit the earnest money. So they fear they have no choice but to close.

My question is: is earnest money ever refundable? I have advised them to see a lawyer who might find a way to recover some of the earnest money, but they think it would be a waste of time. Is it really hopeless?

Thanks for your advice!

[JETX]

Originally Posted by fastspinecho

is earnest money ever refundable?

Yes. Some purchase agreements have stipulations that when not met are subject to refund. Other cases, upon successful litigation, could refund.

Is it really hopeless?

Depends entirely on the written agreement and their reasons for breach. If they simply changed their minds, very likely that would NOT be sufficient for a refund.

[mauikart]

If they "can't" make the payments.... Go back to the lender and tell them the payments are much to high that you can't afford them, so then you won't qualify for the loan. I 'm sure there is something that say's about "sale is contingent on obtaining a loan clause" in the contract. That's maybe a way out to try. Hopefully they never signed the loan doc's yet.
(It worked for me once)

BUT I'M NO LEGAL EXPERT, just bought and sold many homes.

[Ellerge]

Also, tell your lender that you are going to buy a $50,00.00 sports car!

[JETX]

Originally Posted by mauikart

If they "can't" make the payments.... Go back to the lender and tell them the payments are much to high that you can't afford them, so then you won't qualify for the loan.

And of course, your entire response is full of crap!!!

There is NO obligation for a lender to decline a loan simply due to a buyers claim that they can't pay. Also, the problem is NOT with the lender... it is with the seller!!!

I 'm sure there is something that say's about "sale is contingent on obtaining a loan clause" in the contract.

Hmmm... Where did the post say ANYTHING about the sales agreement including a financial contingency clause?? Of is that something you made up??

That's maybe a way out to try.

Hmmm... so is murder-suicide..... and far more likely to work than your erroneous post!!

Hopefully they never signed the loan doc's yet.

Hmmmm... guess you didn't understand the part where the OP says, "Their loan was recently approved"!!!

BUT I'M NO LEGAL EXPERT

Wow!!! That sure is obvious!!!

just bought and sold many homes.

What kind... dog or bird??

[Bigfoot]

JETX is right. One other point: be careful now what you say to your Realtor. Yes s/he is your agent, but now that you're looking for a way out, s/he is about to be out of a commission, likely around $9000.

Ways to possibly back out now are: builder says property will not be ready and the closing time has to be extended beyond the contract date; the finished product is markedly different from what you contracted for. With the slowness of the market currently, don't be surprised if the builder attempts to sue for breach of contract rather than just keep the earnest money.