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Legal Eagle
Legal Eagle, Lawyer
Category: Real Estate Law
Satisfied Customers: 5261
Experience:  Licensed to practice before state and federal court
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If sale of real estate contract has expired can the seller

Customer Question

If sale of real estate contract has expired can the seller refused to return the earnest money in the state of Tennessee
JA: Because real estate law varies from place to place, can you tell me what state this is in?
Customer: Tennessee
JA: Has anything been filed or reported?
Customer: no there was no closing on the house.
JA: Anything else you want the lawyer to know before I connect you?
Customer: the closing was NOT done due to major storm damage to the house. The seller wanted to extend the contract but the buyer refused. Seller wanted to closed before damage repairs were completely finished.
Submitted: 2 months ago.
Category: Real Estate Law
Expert:  Legal Eagle replied 2 months ago.

Hello! I am a licensed attorney, admitted to practice in state and federal court. I have a nearly 100% satisfaction rating so all that means is that you can count on me to help today. The answer to your question is generally no, unless it is written into the contract that the earnest money is not to be returned. In your case, if the closing was done because of major storm damage to the home, then your obligation to perform this discharged. The legal Theory is called frustration of purpose which simply means that the main purpose of the contract, which is to purchase the home, has become so frustrated it's not possible for you to perform. Therefore, unless the buyer agreed to let the seller keep the earnest money, then the seller needs to return it. Even then, if the buyer did agree to let the seller keep it, this may amount to a penalty which is generally disfavored under contract law. The may want to consider just writing a formal demand letter to request their money back. There’s a site that I’ve used in the past where you can find a good template for a demand letter (click here). It only costs $10 and it is way cheaper than litigation.

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