Legal Question in Real Estate Law in Texas

earnest money dispute

The seller, whom we represent, was given $10,000 in earnest money from the buyer for a home that was vacated before closing. The buyer had given our client a letter of pre approval from Wells Fargo so that financing could be backed. After the contract was drawn up and signed, the buyer was denied a loan and therefore wants to destroy the contract and receive all $10,000 in earnest money back because of a property approval clause in the contract stating that if the property does not satisfy lenders' requirement for the loan, the contract will terminate and earnest money be refunded to buyer.

Our counter stands as the clause directly beneath the former which points back to the addendum stating that the buyer must make every reasonable effort to obtain financing approval. The buyer made one single attempt when he obviously could have made more of an effort to obtain financing.

We are preparing for mediation and my question is, how does the law generally view earnest money contracts? Can oral representation or parol evidence be used to dispute this ''breech of contract'' or is it prety much black and white that the buyer could not obtain financing and therefore can retain his earnest money?

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