My husband and I were going to do a land contract purchase on a home and decided to leave a $200 deposit to hold the sale. The owner wrote a receipt stating that we left the deposit and that's it. She had told me she was not going to cash it and I expected to get the check back when we signed papers and brought the actual down payment. Two days later we found out we were not going to be able to purchase the home and I called her right away and told her. She told me she had cashed my check and that it would be needed because she had used her lawyer to prepare the papers. My husband says in Michigan you can break a contract within 3 days, is this true? We feel bad that we cannot purchase the home but I don't think we should lose the $200. Is it worth trying to get the money back?

Thanks in advance for your advise.

I find no law that enables a person to break contract in three days and get back the deposit. If you feel like testing my advice, file in Small Claims Court.

This was not a person who came to your house, where you signed a contract.

No, we went to her house and wanted to purchase it but we did not sign a contract.

But you think she should keep the deposit and we should not ask if she would send it back?

The 3 day right of recission on real estate contracts is federal law. But no contract was really signed here. The thing is the deposit wasn't specified as refundable or non-refundable.

You could probably sue her for recovery of the deposit. Whether you win is iffy.

The 3 day right of recission on real estate contracts is federal law. But no contract was really signed here. The thing is the deposit wasn't specified as refundable or non-refundable.

You could probably sue her for recovery of the deposit. Whether you win is iffy.


Scott, I'm sure you'll know - isn't a land contract the exception to the 3-day Federal rule? (I thought it is/was.)

I'd have to check but it really doesn't matter in this situation. No contract was entered into as yet. The $200 was a binder not the contract. The only question is whether this could be considered a refundable binder.

Interesting - and you're right. It's a binder, not a deposit. Would be curious what a Court would decide.

Thank you for all of your information, I am hoping I will not have to sue, I just wanted additional information before I ask her if she would give us the deposit back or maybe even half.

And I had also had that thought that it did not state "non-refundable" on the paper she wrote and she told me she was not going to deposit it.

Please do not use the comments feature to post follow-up. Use the Answer This Question options instead.

... decided to leave a $200 deposit to hold the sale. ...

Think about this. What would that mean? "Hold the sale". In other words, the seller couldn't sell it to someone else until you came back. The seller has lost the time and possibly other buyers. The deposit is to compensate him for that loss, just in case you change your mind; which you ended up doing.

You are not entitled to a refund of this deposit.