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Non-refundable fee - can it be refunded?

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Pikeman85

Junior Member
What is the name of your state (only U.S. law)? Michigan

So I recently put a deposit down on a used vehicle, under the stipulation that the car would be held for me ONLY IF I did this.

Well, I noticed they're still posting advertisements for the car on craigslist, every day since I did that (I didn't purchase outright because they had to take it to get detailed).

Supposedly the deposit is non-refundable, but I'm not sure if Michigan law allows that (I've heard it doesn't, but can't find it in the law code myself).

I've found what I think is a better car (30,000 miles less, in the color I want so I don't need to repaint it, about 60 miles closer) and as long as it comes with as good of a warranty as this car, I think I'd like to buy this new car instead.

Do I have any recourse, or do I just have to bite it, if I decide to get the other car?

I don't remember signing anything that said non-refundable. He swiped my card using an iPhone app.
 


justalayman

Senior Member
Before going any further, did you actually agree to purchase the car and are simply waiting for the detail work to be performed or was there no actual agreement to purchase the car made at all?

It may be that not only are you not able to get your money refunded but you might be on the hook to actually fulfill the contract you already made.
 

Pikeman85

Junior Member
I do not believe a purchase agreement was made - we had not even 100% confirmed financing (I needed to bring paystubs, proof of bank account, my id (it had gotten lost last week so I had to go to the DMV to get a new one issued, which I since have)).

What would a purchase agreement look like?

They gave me a packet to fill out, but I believe that was for a credit approval and for the aforementioned stuff.
 

OHRoadwarrior

Senior Member
It sounds on the surface like you made an unrefundable deposit. The question becomes when were you reasonably supposed to deliver the credit paperwork? If they sold the car, you might be able to reclaim the money in small claims court.
 

Pikeman85

Junior Member
They have not yet sold the car. I believe they said for me to return it on Monday evening (This upcoming Monday).

So Michigan law does allow for non-refundable deposits?
 

justalayman

Senior Member
If it is a dealer, continued advertising of the vehicle is meaningless. They often advertise vehicles not available for sale simply as a means of gaining traffic into the dealership. It is simple to say to a prospective customer: oh, that car. We just sold it but we have this sweet looking vehicle right over here that I think will be just right for you. Obviously, if they do sell it, you would be due a refund since that is what the deposit was supposed to prevent. If they breach the contract to hold the vehicle, then they must refund the deposit money.


Financing, or lack of, does not mean you did not make a contract to purchase the vehicle unless the purchase was contingent upon financing. I have contracted to purchase vehicles simply by signing a contract stating I would purchase the vehicle for the amount agreed upon. No financing mentioned at all. That would mean that if I failed to complete the contract, they would have an action against me either for specific performance or damages due to the breach of contract.
 

Pikeman85

Junior Member
I don't believe I ever signed any agreement to purchase the vehicle.

I read all of the contracts and information, and saw nothing regarding purchase of vehicle.

I put a deposit down on the vehicle so that they would hold it.
 

justalayman

Senior Member
so, what does the receipt actually say? Do not post any actual names or specifics that would somebody to identify you from it but what exactly does the receipt have written on it?
 

Pikeman85

Junior Member
It says:

Receipt Date 11-8-12" No. 528033
Received from [My Name] [$500.00]
Five hundred dollars
Non Refundable deposit Ford Mustang

From X [My signature]

By [Unreadable Name]
 

justalayman

Senior Member
tell them you want your money back. Unless they can claim it is to compensate them for actual damages, they have no right to retain the deposit.


If they argue, show them this:

Non-refundable deposits are common when purchasing auto dealerships and other assets, such as real estate. APAG does not argue that deposits must be revocable because a non-refund feature turns them into "penalties" for breach of contract. See Woodbridge Place Apartments v. Washington Square Capital, Inc., 965 F.2d 1429 (7th Cir.1992). Instead it contends that the parties never concluded an agreement, and that retaining a payment made in anticipation of a contract is inequitable after the bargaining falls through. That is a correct statement of Michigan law, which the parties agree governs. See Michigan Educational Employees Mutual Insurance Co. v. Morris, 460 Mich. 180, 197-99, 596 N.W.2d 142, 151-52 (1999). Massey might have responded that a contract of sale is unnecessary if the payment is a fee for the right to negotiate. An option for exclusive bargaining rights is a kind of contract. Keeping an offer open, and other bidders away, is a valuable asset for which potential purchasers may agree to pay handsomely. But Massey does not contend that the payment is best characterized as an option premium. Instead, he disputes the bankruptcy judge's conclusion that the parties lacked a contract of sale.
which is a citation from this:

Baker O'Neal Holdings, Inc. v. Massey, 403 F. 3d 485 - Court of Appeals, 7th Circuit 2005

but the case cited is this:

MICHIGAN EDUCL. EMPLOYEES MUT. INS. CO. v. Morris, 596 NW 2d 142 - Mich: Supreme Court 1999
596 N.W.2d 142 (1999)

http://scholar.google.com/scholar_case?case=10361424377924087613&q=Michigan+Educational+Employees+Mutual+Insurance+Co.+v.+Morris,+460+Mich.+180,+197-99,+596+N.W.2d+142,+151-52+(1999)&hl=en&as_sdt=2,23

I have not read through the Michigan case and am taking the statement in the citation as accurate. The reason for the deposit is not stated as it being as a purchase of a right to negotiate (a purchase option contract) or as a earnest money deposit for an already negotiated contract. As such, the ambiguity of the justification for the deposit makes it so there is no actual reason for the deposit. As such, they cannot support a claim to the money for some unspecified action on their part.
 

Pikeman85

Junior Member
Wouldn't it fall under exclusive bargaining rights? The deposit was to hold the car (though they've been advertising it publicly since then)
 

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