We recently sold a listing and after we obtained the deposit from the Buyer the Seller called me to ask when she could have the real estate deposit. Apparently she needed to make a purchase and was counting on that cash right away. Here’s the 411 on real estate deposits and what happens when deals fall through (or not)
You’re Sold Conditionally
A conditional sale is most common when a Buyer needs to confirm a few things prior to “firming up” on their purchase. The most common conditions we see are: Financing, Home Inspection, and Status Certificate review (condo only). Of course there are others but these three are most common. If the Buyer is unsatisfied with any of their findings during their conditional period they can back out of the deal and they get their real estate deposit back. Sorry you can’t keep it!
You Have A Firm Deal
Well this is where things get tricky. Many folks think that you are able to just take the real estate deposit if a Buyer walks or fails to close (aka Buy) the property once there is firm deal on the table. A firm deal is one which doesn’t have any conditions or the conditions have been satisfied by the Buyer and “waived” or “fulfilled” effectively removing them from the deal. If the Buyer fails to fulfill their obligation to close the deal you must sue the Buyer for the real estate deposit and win, effectively have the deposit money (and anything over and above) rewarded to the Seller as damages. Here’s the catch: you cannot unload your asset during the litigation. What does that mean to you? These lawsuits can take many many months or even years to see through. During that time you cannot sell your home and carry on with your life like you had hoped. Is potentially banking a few thousands dollars worth that? The answer is usually no. Most of the time, as a seller, it’s better for you to just let the Buyer out of the contract and move on with your life. Unless we’re talking about hundreds of thousands of dollars like in some commercial deals we’ve seen…then it may be worth sticking out a lawsuit.
So the main reason you can’t have the money before the Buyer actually buys your property is that there’s always a chance the deal won’t close. So to sum it up: You don’t just get the real estate deposit if the deal doesn’t close and you can’t have it until the deal closes. Clear? Questions? Just message us and we’ll holler back.