Kansas Buyer paid earnest money, provided loan approval letter, moved some furniture in to house, but the day
before closing, Buyer told bank the stock market drop meant Buyer's money is now insufficient. Not only has Buyer backed out of contract but is demanding return of earnest money. Only if the buyer was unable to get the approval, does the contract require return of EMD, but approval was already provided. Therefore it appears the Buyer should forfeit the EMD. Should Seller be saddled with the mandatory interpleader over EMD dispute in this fact situation? Does the Seller deserve to keep the EMD? If so, can Seller get around the interpleader or at least make Buyer pay for the legal fees? Thanks!
So, clearly the answer should be that the seller should be entitled to the earnest deposit in the situation that you describe, however, It is important to interpret whether the return of it was based on approval or if it was based on the buyer being able to obtain financing. The financing addendum of a base real estate contract can be vague but the manner in which it was filled may come into play. Regardless, it may be better to just settle for something like HALF and cut your losses and avoid mediation or a small claims suit. Good LUCK!! Let me know if I can help further....
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