deposits on home purchase

[cb]

What are the laws regarding deposits (held by title company) on the purchase of a home when the buyer backs out of the deal prior to close of escrow? In this situation, the realator working for the buyer, who was trying to purchase a duplex, assured her she would qualify for one type of loan and that her closing costs would be approx $4K. After paying $300 for the inspection, and problems were found, she was told that because she would be renting out one-half of the duplex (she would occupy the other) that she could not get financing under the specified program, but that she could get another type of loan, however her closing costs soared to $8K. Since she did not have $8K to put up she had to back out of the dealer. The sellers now claim that they are entitled to keep the $1000 deposit she made, which is being held by the title company until both parties sign to release it. The duplex appears to either have been sold to another buyer or has been taken off the market. Isn't the buyer entitled to the return of her deposit? Where can I look to find the laws regarding her rights in this situation?

 

[cb]

P.S. This took place in California.

 

[Tracey]

Unless the purchase contract stated that B got her earnest money back if she couldn't get financing, seller gets to keep the money as liquidated damages for buyer's failure to complete the sale. Presumably, if S had accepted another offer, S would have gotten the money sooner & not have had to go through the hassle of finding a second buyer.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.