4

This is a more focused, side-question based on some discussion in this post.

Our Contract Details:

  • Closing date of August 18th
  • The contract has a buyer contingency of them selling their condo
  • The closing date is going to pass before they're ready to close (requesting 2 week extension)

My question: What happens to the initial escrow deposit? If this falls through (if we can't agree on an extension, etc.), can we contend to keep the deposit? Or are they free from any repercussion due to their contingency?

11

Since the contingency is in the contract and has not been removed, if the purchase falls through due to not selling the existing property, they will get their earnest money back. That was the whole point of putting the contingency in the contract in the first place.

7

Posting an answer to my own question here for future Googlers.

I spoke to our agent, who indicated that there's actually a line in the contract that says the date of the expected contingency sale (August 1st), and that we have to receive a written notice of the sale not taking place within 3 days (which we did not receive).

Contract Excerpt:

If the sale of Buyer's property does not close by 08/01/17, Buyer may, within 3 days thereafter deliver written notice to Seller, either: a) terminating this Contract in which even the Deposit shall be refunded to Buyer, thereby releasing Buyer and Seller from all further obligations under this Contract; or b) waiving and removing this contingency and all financing contingencies, and continue with this Contract.

So legally, it seems we would have a case to keep the escrow deposit if the contract isn't fulfilled by the closing date and we can't come to an agreement on terms for an extension.

  • Interesting. Thanks for posting that update. – mikeazo Aug 16 '17 at 19:30
  • 7
    I agree that you have a decent case, but it has to be interpreted in the light of whatever the contract says about when you can keep the deposit. The clause could for example be read as giving you an out to put the house back on the market if you want, and it may be that the deposit is yours only if they severely breach the contract, not if you decide to terminate the contract. Pair up that clause with anything else it says about the deposit. – user6726 Aug 16 '17 at 20:11

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