Legal Question in Real Estate Law in Pennsylvania

Re: Return of Earnest Money Deposit for Home Purchase

You asked about an earnest money deposit.

When parties arrive at an agreement to a contract and do anything to prove up that contract then the agreement is binding and enforceable.

In the case of real property, the sale of the property actually takes place when an offer is accepted and there is ANY signed writing to demonstrate the agreement. This can, and often does, include a signature on a deposit check. In your case you signed an agreement of sale.

This is the key, when you signed that agreement and the other side accepted it you had just purchased the property. The actual transfer may take place at some later time, but the sale occurs when the agreement is reached.

Unless the agreement had a condition which allowed for the purchasers to withdraw if they failed to obtain financing then the seller could have forced the purchaser to go through with the transaction.

Deposits are there for a reason. They represent an earnest intent of the purchaser to complete the transaction. If there was no deposit what was to prevent you from putting out multiple contracts on houses and closing only on one?

The deposit can be thought of as liquidated damages. In many cases, the seller actually may see more damages than are covered by the deposit when a purchaser fails to complete the transaction. In that case the seller can actually go after the party with a claim for the difference betweem the bargain that was arrived at and the final cost of selling the home.

Look at your contract and see if it was conditional on your being able to obtain financing, or any other cause. Unless the agreement provides for the return of the deposit then you have no right to get the deposit back.

This is one reason that buyers should try to put the lowest down-payment amount of money possible on a property.

Regards,

Rogers