Closing Real Estate Escrow: When is Your Buyer’s Deposit in Jeopardy?by Mike King on January 5, 2011
My Dad used to say he wasn’t tight with his money he was just emotionally attached to it. Whenever I am working with first time buyers invariable the question that comes up the most is what will happen to my deposit?
There are two main parts to the buying process once a home is in escrow. The first part, pre contingency removal, is the phase where buyers can carry out their due diligence and if for any reason they decide not to go through with the purchase then the deposit should be returned without incident.
In phase two, post contingency removal, if the buyer is in “default” and decides to cancel after they have formally removed the contingencies in writing then it is almost impossible for the buyer to create a scenario where the seller is not entitled to keep the entire deposit. I have represented two sellers where the buyer did in fact default, in both cases; the deposit was awarded to the seller. So, before you go signing off on those contingencies make absolutely sure you are totally committed to the purchase.