How can I get my earnest money back? Please help

Question

I would appreciate it if I get some advice on one of our deals. We are purchasing a $600K property in California but the deal fell through because the lender cancel the program during the pandemic. And I also have already signed off all contingencies. The sellers still has not signed for the release of my earnest money. They are on a contingent with another buyer now. I would probably just give them $2000 and consider it the price of education in this instance. If they still won't sign, how should I do? Thank you all.

Ned Carey · Answer

@Jennifer Kim first read your contract and make sure you are entitled to your earnest money back.  If you have signed off all contingencies I would think no you are not entitled to it. But my speculation si not important. What is important is what the contract actually says.

There most certainly is a process in your state to deal with this. You agent should be familiar with it. Given the covid situation even if you are not entitled to the earnest money back by the contract, a court may have sympathy and allow you to get it back.

I would be interested to hear how this works out.

Greg H. · Answer

A title company in Texas is not going to release any earnest money without a release signed by both parties

Here is a good illustration of the process when there is a dispute

https://lonestarlandlaw.com/earnest-money-disputes/

Kyle Mccaw · Answer

@greg h. I have personal experience getting escrow back without other party sig. It was not a simple ask for the money and get it. The title company did some work on my behalf. I know they sent a specific letter from an attorney that had some verbage with a 30 day notice. End result I got my money without second party.

Kyle Mccaw · Answer

I suspect California is not too different than Texas in that you can bring this issue to the title company. In Texas the title company will release it to you if you have a financing contingency that is covered in the contract.

Sarah Brown · Answer

You need to look at your purchase and sale to ensure that it says you receive your earnest money back in the event you can't get financing.  Is the money held with title?  If so, you will need both signatures to get it released.  It may be worth paying an attorney to write a letter.

David Nutakor · Answer

@Jennifer Kim, if the seller doesn’t want to release the earnest money (EM), then you just have to wait for two years (this duration might be different for your State) for the title company to release the EM to you, unless the seller wants to settle the issue in court, which is not common due to excessive attorney fees.

Curt Davis · Answer

Follow what the purchase agreement says and if need be get your attorney involved if necessary.

Most contracts state that if financing falls through the earnest money is refundable.

How can I get my earnest money back? Please help

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