I attempted to buy a Co-Op in Yonkers. I put a down payment in escrow. The mortgage company/bank denied the loan stating the Co-Op is financially unstable. The escrow agent has not returned any correspondence or call.
You need to look at the terms of your contract to see if your performance was contingent on both receiving a mortgage commitment, and being approved by the board. If your contract does have a mortgage contingency then you do have the right to the return of your down payment. Are you using an attorney in this transaction? If yes, ask the attorney to assist you in this.
Any standard contract should have a mortgage contingency clause that would enable you to get your down payment back in the event that you were unable to obtain a mortgage commitment. You would have to show the party that is holding the escrow that you made a prompt and truthful application to the mortgage and you were turned down. If they refuse, you will have to sue in small claims court (assuming the down payment is low enough) to get your money back.
Defer to the terms of your contract of sale, but typically, if there was a mortgage contingency, and financing could not be procured through no fault of the purchaser, to wit, the predicament you are in, whereby the co-op is in financial disarray, and as such financing cannot be obtained, you should be able to receive return of your deposit. Your actions do not seem to rise to the level of willful default. Again, defer to the contract of sale, and speak with your real estate attorney as soon as possible to be sure that you adhere strictly to all time frames/notices provisions, etc. Good luck to you.
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First confirm with your attorney that your contract contained a loan contingency. If so, make sure your attorney sends a written notice of cancellation based on the denial. A copy of the written denial letter from the lender should be included stating the reason for the denial. Doing the foregoing confirms that you acted in good faith during the loan process. Your down payment is 100% refundable in such a circumstance.
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