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What can my clients do if the Seller won't physically sign the cancellation of contract to get the earnest money deposit back?

Sacramento, CA |

My client was purchasing a home in Sacramento county and they deposited the Earnest money into escrow for the amount of $5000. The buyers were having some issues and requested the extension of time to close and also requested the extension of the loan contingency. This was approved. However, for some reason my Buyers were unable to secure a loan. We informed the Seller of this within the time frame of the loan contingency. However, the Seller refuses to sign the cancellation of contract and issue a refund of the earnest money deposit. We have even provided a letter from the bank stating Loan was not approved. The Seller continues to say that this is because the buyers were not able to sell their home and there was no such contingency in the RPA. This is not the case in reality.

Attorney Answers 2


  1. Need to follow any and all prelitigation steps required by the contract and if that still does not get the closure of escrow to be signed by both sides, then a court case is needed to sort out the mess, or escrow cannot release funds. Clients should consult with an experienced real estate attorney in the area.

    By: Robert Stempler (please see DISCLAIMER below)
    CONSUMER LAW OFFICE OF ROBERT STEMPLER
    A Professional Law Corporation

    NOTICE: The above statements are provided for general information purposes only and are not intended as legal advice or advice of any sort for a specific case or legal matter. If you do not have a signed attorney-client fee agreement with the Consumer Law Office of Robert Stempler, APC ("the Firm"), then until such written fee agreement is provided and signed by both a prospective client and attorney for a particular case, neither Mr. Stempler nor the Firm will represent you nor will they be your attorney in any matter and you remain responsible for retaining your own attorney and for compliance with any and all deadlines and for any statutes of limitations that may pertain to potential claims. Comments made on a public forum, such as Avvo.com, to not have any confidentiality because others may read them. The result portrayed for a client was dependent on the facts of that case. Results will differ if based on different facts. The Firm and Mr. Stempler are a debt relief agency. The Firm and Mr. Stempler help people file for bankruptcy relief under the Bankruptcy Code.


  2. You should have an attorney review your purchase agreement and all written extensions to determine whether or not your client is entitled to their deposit back and what steps to proceed with to get the deposit back.

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