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Does my son need a real estate lawyer?

Middletown, PA |

My son was purchasing a home through a real estate agent. The sale was almost complete and the mortgage had been approved. At the last minute my son received a call that the home went under foreclosure. The seller filed bankruptcy. The seller and his agent did not disclose the hidden agenda. My son retracted the sale and asked the seller for refund of all expenses paid up front (down payment etc.). The seller is refusing to refund all purchase expense. Does my son have a case?

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Attorney answers 3


If the agent used the Pennsylvania Board of Realtors Agreement of Sale (AOS), your son probably has the right to receive back his entire hand money deposit. Whether he is entitled to other expenses (like appraisal, application fee, depends upon how the AOS was completed. I say "probably" because whether he can terminate the AOS may depend on whether it is possible to pay off and satisfy the mortgage while paying the other closing costs from the proceeds of the sale. Yes, your son should have a lawyer in such a situation. It is not uncommon for sellers to be unreasonable over return of hand money and, if a resolution cannot be reached by negotiation, you may have to sue.

Clifford L Tuttle, Jr
Attorney at Law
Pittsburgh, PA

The foregoing answer does not constitute legal advice and does not create a lawyer-client relationship. Answers are based upon the facts stated and may change if there are additional facts not contained in the question.


Yes, your son should seek a lawyer's help with this matter.

This can get very complicated because of all the variables involved (contract with the agent, contract with the seller, the seller's bankruptcy, state laws dealing with earnest money deposits, regulations regarding real estate agents, etc....).

Licensed in MD, PA and DC. This is not legal advice. I am not your attorney. You should consult with an attorney licensed to practice in your jurisdiction regarding your specific circumstances.


Your son may have a case, but he may also be tied into a bankruptcy proceeding against his will. A contract to purchase real estate is known as an executory contract in bankruptcy and very specific rules apply as to what will happen to that contract in the seller's bankruptcy. If this is a chapter 7, the trustee may want to move forward with the contract if there is any benefit to the seller's creditors, or he may reject the contract. I would want to know who is holding the money? If it is a realtor there is a good chance your son may be able to get his money back. If the money is being held by the seller (less likely, I hope) then I think he won't have much chance.

I cannot conceive of your son proceeding without consulting a bankruptcy lawyer on this question. Issues regarding executory contracts in bankruptcy are very complex.