FAQ Friday: Can the Buyer back out?
Posted by: kateg 1 week, 2 days ago
Despite what HGTV wants you to believe, buying and selling a home has many more steps than looking at 3 homes and choosing the one you plan to move into. Check out my series of FAQs that I hope you’ll find helpful, whether you’re buying or selling a home.
Over the holidays, a friend (we’ll call him “Steve” for the sake of this blog) reached out asking if I could talk to his friend and recommend a real estate attorney. A friend of Steve’s was selling her condo downtown and the Buyer backed out. She wondered if she could keep the Buyer’s deposit.
Steve’s friend and I connected the next day. She explained that she’s selling her condo and while the Buyer was doing their due diligence, he decided he didn’t like the parking and no longer wanted to buy the condo. The Buyer had $10,000 in escrow on deposit, and she wanted to know if she could keep the money.
In a standard California Association of Realtors purchase agreement, the Buyer has 17 days to do any non-destructive inspections to the property as part of their research into whether they want to buy the home or not. During that time, the Buyer transfers their earnest money deposit in escrow. That money is refundable to the Buyer until they remove their contingencies.
For Steve’s friend, the Buyer had not yet removed their contingencies; they were scheduled to remove their contingencies the following day. So, the Buyer is entitled to their full deposit back.
There are situations where the Seller is entitled to the Buyer’s deposit. Let’s say a Buyer has completed their inspections, reviewed the disclosures, and has decided to “go all in” and purchase the property. At that point, the Buyer removes their contingencies in writing. If after removing their contingencies the Buyer changes their mind about buying the home, in most situations the Seller is entitled to either their deposit or 3% of the purchase price, whichever is less.
Whenever I’m working with Buyers and Sellers, I always take the time to sit down and educate them on the process, whether that’s before a Seller puts their home on the market, before a Buyer writes an offer, or when a Seller receives an offer (and plenty of other times, as needed). This consultation time may seem like a waste of time to some people, but when you’re buying or selling one of your biggest assets, there’s nothing more important than understanding the contract and the process.
Give me a call today if you have any questions about the process of buying or selling a home. I love being a resource to clients!
Kate G Milke
DRE # 01782461
Cell: (619) 933-5319
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Latest NewsJanuary 17, 2020 FAQ Friday: Exciting New VA loan benefits! January 10, 2020 FAQ Friday: Can the Buyer back out? January 6, 2020 Restaurant Spotlight: Rosemary Trattoria - Authentic, Family Friendly Italian READ MORE
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