When a Florida homeowner places his or her house on the market for sale, problems may arise between the time a potential buyer tours the home and the closing table, if he or she makes an offer that gets accepted. Legal problems can be challenging to resolve, especially concerning earnest money, which a buyer may place in trust to emphasize that he or she is serious about wanting to purchase a particular home. If a deal falls through, it can spark a disagreement if the buyer believes that he or she is entitled to a refund of earnest money, but the seller believes otherwise.
Earnest money is usually placed in escrow
When a potential buyer puts forth earnest money, the money does not go directly into the hands of the seller. It is either placed in trust or, more commonly, in an escrow account. If the sale goes through, earnest money can be applied to a down payment or closing costs for the home in question.
When is a buyer entitled to a refund, or not?
If a home fails to pass inspection or there is a lien against it that is preventing title insurance, or if a buyer cannot secure a mortgage loan, it may be possible for the buyer to receive a refund of earnest money. In some cases, however, such as if a buyer does not meet deadline requirements listed in a contract, earnest money would be forfeited. The key factor in either scenario is the written contract. It is critical for both parties to clearly understand the implications of the terms to which they are agreeing before signing.
Can a home be relisted without refunding earnest money?
It has also happened in the past that a seller has refused to refund a buyer’s earnest money, even if the terms of the contract clearly state that it should be refunded. If a seller relists a home without refunding earnest money that should be refunded, a buyer can take steps to resolve the matter in court. An experienced Florida real estate law attorney can provide strong support to determine whether an earnest money refund is required in a specific case, as well as recommend a best course of action to resolve a real estate contract problem.