How to get earnest money deposit back for a home purchased in california? our contract has no contingency clauses

Question

I recently purchased a property in California and paid my earnest money deposit 10 days ago. However, I’ve since discovered that the house is located at a T-junction, which was not disclosed by the seller or their agent. There are no finance or loan contingencies in my contract(no contingency clauses at all really), but I’m concerned that this material fact could impact the value or livability of the property. Given that the T-junction wasn’t disclosed, do I have grounds to cancel the contract and recover my earnest money deposit? Also are there any other protection clauses or grounds that can help me get back the moeny? The earnest money deposit I paid is $40k and the seller agent is not giving it back. I dont have any realtor

Pavel Kolmogorov · Answer

In California, a seller has a common law duty to disclose facts materially affecting the value or desirability of the property if those facts are not known to or within the reach of the diligent attention and observation of the buyer. This duty extends to the seller's agent as well. Undisclosed facts are considered material if they would have a significant and measurable effect on the market value of the property. If you can demonstrate that the seller knew about the T-junction and failed to disclose it, you may have a valid claim for rescission based on nondisclosure of a material fact. This would entitle you to recover your earnest money deposit.

James L. Arrasmith · Answer

Getting your earnest money deposit back in California without contingencies can be challenging, but there are still potential options. One approach is to argue that the seller failed to disclose a material fact about the property. In California, sellers must disclose known defects or conditions that could impact the value or desirability of the home. If the T-junction poses safety concerns or affects property value, you may have grounds to claim nondisclosure. You can review the seller’s disclosure documents to see if this was mentioned and, if not, use this as a basis to request the return of your deposit. 
 
Another possible argument is misrepresentation or fraud. If the seller or their agent intentionally withheld information that a reasonable buyer would want to know, you may be able to claim that the contract was based on incomplete or misleading information. This could strengthen your case for canceling the contract and recovering your deposit. You might consider sending a formal demand letter stating your position and warning of possible legal action. 
 
If the seller refuses to return the deposit, you can escalate the matter by filing a complaint with the California Department of Real Estate or pursuing legal action in small claims or civil court. Given the amount of money involved, you may need to file in superior court. Mediation or arbitration could also be an option if required by your contract. Acting quickly is important, as real estate disputes often have strict deadlines.

Q: How to get earnest money deposit back for a home purchased in california? our contract has no contingency clauses