Legal Question in Real Estate Law in Arizona
Can an earnest deposit be returned if loan falls through?
My father signed a contract in July 2006 for a new home build. He put down $3,000 for an earnest deposit. He recently was hurt at work and now is unemployed. At the time, his loan was approved, but now obviously without a job, he will not be able to get the mortgage. The house probably will not be done until February. Is it possible for him to get his earnest money returned since the loan will not be approved? Does he need to cancel the contract before the loan does not approve? Thank you for your help.
1 Answer from Attorneys
Re: Can an earnest deposit be returned if loan falls through?
Always difficult if not immpossible to give an opinion on a contract without examining the contract. Was "approval" of the loan the condition, or "funding" or "closing?"
Also, it may not be in your father's best interests to cancel the transaction. If you want to bring me the contract at my office, and give the complete facts in a no obligation, free consultation I will help you. I can think of three possible alternatives for your father, but need more facts to give a professional opinion. Do not delay. Speak with me or another attorney at once. Even if he does not want to go through with the purchase, he might still be able to receive some funds and be off the hook for the purchase.
Best regards,
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