Can Earnest Money Be Refunded?
Ask the Real Estate Lawyer: Real Estate Law Q&A
REM #LAW 650
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A reader put earnest money down on a home but has now changed their mind. Since no contract was signed, Sam and Ilyce feel a refund can be expected.
Q: My husband and I put down earnest money on a home from a private owner.
We signed no binding contract. We only have the receipt for the money we put down. Can we change our minds about buying or can they keep our earnest money?
A: If you have no contract, you should not be bound to buy the home. In order to bind you into buying the home, in general you needed to have signed a document that stated the purchase price for the home, identified the home and the closing date.
You mention that you signed no “binding” contract. If you and the seller signed something that would generally give a reasonable person the idea that you agreed to buy the home, agreed on a price and agreed on other basic and necessary terms, you might be obligated to buy it.
If you only made a verbal agreement with him to buy the house and gave him a deposit, he doesn’t have a right to keep it and you should not be obligated to buy the home.
You should talk to an attorney in your state about this issue and make sure
you take with you copies of any documents you might have.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com
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