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Ely
Ely, Counselor at Law
Category: Landlord-Tenant
Satisfied Customers: 99982
Experience:  Attorney
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I have a contract to buy a home based on the contingency of

Customer Question

I have a contract to buy a home based on the contingency of my home selling. I gave 5000.0 ernest money. The home did not appraise at the amount agreed to sell but I planned to just eat that. My contract states my way out is no ernest money if I break the contract. My financial situation has changed and I no longer want this home. I understand I have to give up the ernest money. Can they sue me as well if I don't purchase their home after I sell mine, because I broke the contract. They can still take offers and I have 72 hours to counter or lose anyway. Is this breaking of a contingency offer considered a breach of contract? Can they take me to court? Will the judge take into consideration my current financial picture?
Submitted: 1 year ago.
Category: Landlord-Tenant
Expert:  Ely replied 1 year ago.
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I am sorry to hear about this situation.
Generally speaking, unless the contract states otherwise, the seller can keep the buyer's earnest money if the buyer backs out of the contract.
This is not true and the buyer CAN get the earnest money back if any of the following is true - what you term contingencies:
1) The contract requires buyer to get a mortgage. If the mortgage cannot be secured and the buyer made a good faith effort to secure it, then, the contract usually allows the buyer to walk away and keep the earnest money;
2) The buyer does a home inspection and finds major faults. If so, the buyer can walk usually walk away and keep the earnest money; or
3) The contract allows the buyer to simply walk away.
Now, #1 and #2 are common, #3 is not.
What happens if none apply? Then the buyer defaults. If so, the seller can (a) keep the earnest money and find another seller, or, (b) keep the earnest money but also pursue the buyer for breach of contract, asking (i) specific performance for purchase, or, (ii) judgment for the money minus the difference of what they would have received from another buyer.
Unfortunately, the Judge will not take one's financial into consideration when deciding judgment.
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