Redmond, WA asked in Real Estate Law for Texas

Q: Request for Earnest Money Refund Options

I signed a contract to purchase a new house in Liberty Hill and paid earnest money along with an upgrade amount. Around the same time, I also bought a second home in Georgetown with the intention of making it my primary residence. However, I didn't end up moving into the Georgetown property as planned.

Nine months later, as the closing date for the contracted house approached, it fell through due to a financial contingency. The seller didn't grant any additional time and promptly relisted the house on the market, resulting in its sale within two days.

Following discussions with the seller about the return of my earnest money ($36,000), they agreed to apply it towards the purchase of another house within six months. I'm wondering if this is a viable way to recoup the earnest money and upgrade option amount.

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

A: While it depends on the particular contract, most earnest money contracts for a house with a financing contingency (which is common) provide that the earnest money will be refunded to the buyer if the financing contingency isn't met. Typically, the Buyer only has the obligation to apply for a loan on the specified terms and conditions.

Check the Third Party Financing Addendum to your particular 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.