When you are looking to buy real estate, you expect everything to go smoothly. However, this does not always happen. Problems can arise, which can derail your plans of purchasing real estate. Fortunately, if issues arise that make it impossible for you to proceed with the purchase and contingencies are in place, you may be able to recover your earnest money deposit. For example, if you were unable to sell your current property, denied a loan, discovered major issues with the property, or the seller failed to complete agreed-upon renovations or repairs, you may be entitled to recover your earnest money deposit.
If you went into a purchase agreement and something happened that makes it impossible for you to proceed with the purchase, and you are entitled to recover your earnest money deposit, you may be wondering how to get it back. Below, we discuss how to get your earnest money deposit back.
Step #1: Contact the Seller in Writing
Were you denied a loan? Did you find problems with the title? Or perhaps during the home inspection, you found major issues with the property. Whatever the reason for deciding to back out of the purchase agreement and wanting your earnest money deposit back, you should first contact the seller in writing. Inform the seller in writing that you wish to back out before the contingency deadline ends. Your real estate agent can help you with drafting the letter.
Step #2: Sign Release Forms
The next thing you need to do is to sign release forms. This is assuming the seller is okay with you backing out and getting your earnest money deposit back. You and the seller must sign a release of earnest money form before you can get your earnest money deposit back. A release form indicates that you and the seller agree that you will receive your earnest money deposit.
The basic contents of the earnest money release form include the following;
- Date when the form has been filled
- Buyer’s name
- Seller’s name
- Contract signature date. This is the date when you and the buyer signed the original contract.
- Escrow agent’s name
- Property details
- The receiver of the earnest money
- Signatures
There may be other forms that you need to sign before you can get your earnest money deposit back. A realtor or a lawyer can help you determine if there are other forms you need to sign.
Step #3: Get in Touch With the Escrow Company
It is crucial that the escrow company or agent is on the same page. Therefore, inform the escrow company or agent of your decision to back out of the purchase agreement and send them the signed documents. The escrow company or agent will process the documents, and if things go smoothly, you should receive your money within a few days.
How Long Does It Take to Get Earnest Money Back?
This can vary. However, in most cases, the refund happens within a week or so if the parties are on the same page.
Contact Us for Legal Help
A real estate lawyer can help in case of earnest money deposit disputes. If you are having problems getting your earnest money deposit back despite being entitled to a refund, contact our experienced attorneys at SAC Attorneys LLP.
