Dallas, TX asked in Real Estate Law for Texas

Q: When a Buyer cannot provide proof of lender's PreApproval letter is the Seller still bound to the contract?

Should the Buyer be allowed to receive all of the Earnest money in such case according to law, seeing they cannot prove they are able to pay for Seller's property as stated in the contract?

Related Topics:
1 Lawyer Answer
John Michael Frick
John Michael Frick
  • Frisco, TX
  • Licensed in Texas

A: It depends upon the language of your earnest money contract.

Ordinarily “proof of a pre approval letter” is not required.

But, commonly, earnest money contracts contain a third party financing addendum. This addendum may allow the Buyer to cancel the contract and receive its escrow deposit back if approval of third party financing is not obtained or it may limit that right to circumstances in which the appraisal of the value of the property does not meet the lender’s underwriting requirements.

Your real estate agent ought to be able to explain to you the terms of your earnest money contract.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.