[mek420]

My client made an offer on a property which was accepted. The loan and inspection contingencies were NOT lifted and the seller's agent did NOT send any notice to perform. From the time the offer was accepted until the inspections were completed, the loan programs had changed and the client could no longer obtain a loan without putting a minimum of 40% down on the property, which was not realistic given their finances. In addition, the inspection report showed that the home needed much repair and the seller refused any credits, so the contract was canceled. The seller's agent is now threatening that the deposit will not be returned and that by going past the date of the contingencies, they were lifted by default. I cannot conceive that the seller can legally do this. Am I correct in my position? Thanks...

[ScottGem]

Let me see if I have this straight. The buyer entered into a contract and paid a deposit. They failed to meet the contingencies in the contract and those delays resulted in they not being able to get financing so they backed out.

And you think the buyer is entitled to a refund of their deposit? No you are not even close to correct.

[mek420]

Scott, I appreciate your prompt response, but perhaps I was not clear enough in the way I explained the situation. The client made all attempts to fulfill the responsibilities. The inspection was done in a timely manner and the client fully intended to complete the purchase. As you are probably aware, bank programs change seemingly in the blink of an eye, and in reality on a day to day basis. The seller expected my client to fully exhaust their entire savings for the down payment on a property that was in need of major repair. The client went through many loan brokers in an attempt to find a program that would be feasible to go through with the purchase. It was not possible. Also, as per California law, the contingencies are not removed unless done so in writing, as long as the buyer is acting in good faith, which they absolutely were. Again, thanks for your time.

[Fr_Chuck]

And as a good agent you were to add that the current loan had to still be available at closing, since a agnet also knows the loan market is changing.

That is why the buyer expects his agent to protect him in these cases.

So he did not actually have an "approved" loan, merely a "pre approved loan" which we all know almost never is a real promise of a loan

[ScottGem]

Let me try this again. The buyer entered into a contract. That contract specified that they needed to meet certain contingencies. If the buyer was not able to fulfill the terms of the contract through NO fault of the seller, then the buyer is not entitled to the deposit back. However, if the seller did not fulfill their end (and given a false impression of the property condition could be considered that) then the buyer might have some out.

So, if the seller feels he doesn't have to return the deposit, then the buyer has to sue and let a judge decide who breached.

[mek420]

Chuck,
Indeed, it was specified in the contract that the loan had to be available. I always protect my clients.

Best regards.

[LisaB4657]

Guys, the buyer is going to win.

If the buyer acted in good faith and actually tried to get a loan, and if the seller acted in bad faith and refused to make legitimate repairs, then I can't see any judge awarding the deposit to the seller.

[Fr_Chuck]

What repairs, the only reason was the original loan feel though that I read and the next loan was costing more/

The repairs were acceptable from my understanding, they had an inspection done, and did not reject the loan for that reason

[LisaB4657]

... In addition, the inspection report showed that the home needed much repair and the seller refused any credits, so the contract was canceled...

Chuck, this is from the original post. If the request for repairs was legit and the seller refused then the buyers had a valid reason right there to cancel. If this goes to court and the buyer shows they couldn't get a mortgage plus the seller wouldn't make legit repairs then I can't see any court awarding the deposit to the seller.

In fact I can't tell you how many times I've seen a court refuse to give the seller the deposit even when the seller had a great case. Judges don't like to give away a buyer's money when the buyer was really trying to fulfill the contract.

[ScottGem]

Guys, the buyer is gonna win.

I don't disagree. But it depends on what the seller disclosed (or didn't disclose). It also means that the buyer will have to go court to recover the deposit.