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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.

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Attorney answers 2


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)
A Professional Law Corporation

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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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