My buyer wants to cancel his home contract. Who gets the earnest money?

Answer by  withluck (1745)

Refer back to the original contract when a question of earnest money is involved. The contract should state clearly who gets the earnest money and under what conditions or circumstances. The earnest money is there to show to good faith, but a lot of things can happen before the closing.

Answer by  withsmluck (793)

Who gets the earnest money when a buyer cancels depends on the contract wording regarding the earnest money. There should be a paragraph on your contract that states this clearly.

Answer by  Anonymous

Usually the buyer will eventually end up with the $ because there are typically buyer conditions and it is difficult for the seller to prove that a buyer's financing and inspection conditions were satisfied when the buyer is not inclined to see his own conditions satisfied.

Answer by  patti (29325)

Generally, the seller and the seller's real estate agent split the earnest money. Details should be included in the contract between the agent and the seller.

Answer by  patti (29325)

The conditions of earnest money should be spelled out in the contract. For example, if the agreement was contingent up him securing financing and he can't, he gets his earnest money back. There may be a stated period during which he can void the contract. Refer to the documents for clarification.

Answer by  mammakat (11147)

If this was done correctly the earnest should be held by a disinterested third party, and under contractual rules that clearly spell out the disposition in case of default. If this was done informally it should default to you, but good luck collecting. You may have to go to court.

Answer by  tamarawilhite (17883)

Earnest money is paid to the home's owner. After all, the seller lost other potential home sales while dealing with this buyer. The earnest money is to pay for the hassle and lost opportunity of closing with the seller.

Answer by  John38 (79)

If the buyer is within his rights to cancel the contract depending on the languange in the contract and the particular circumstances, then the buyer would be entitled to the return of the deposit. If the buyer was in breach of the agreement in canceling, then the seller may have a case to be able to retain the deposit.

Answer by  barkley (951)

Who gets the earnest money depends on what is specifically stated in the contract and what the reason is he wants to cancel the contract. There should be a paragraph in your contract that addresses the conditions for the earnest money and how a refund will be handled.

Answer by  StarOne (941)

The buyer gets it when they have good reason to back out. If the buyer backs out for no reason the seller keeps the money.