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  1. #1
    Join Date
    Nov 2013

    Default Can You Recover Earnest Money if Financing Fails, With No Contingency

    My question involves real estate located in the State of: PA

    Escrow Money....Is it against the law for the attorney to keep the escrow check.

    The contract does not state that I would get my money back as the sellers Attorney advise me that " indicates the bankruptcy court will not approve the agreement of sale if there is a mortgage contingency clause." when I asked for them to put it in the contract.

    The bank did not approve my loan because the business is out of market reach. This had nothing to do with credit, etc as my end is clean and shows excellent credit etc. Because the bank would not approve my loan for the only reason "that the business is out of market"

    With this I tired another bank; as advise to do so, I got the same non-approval letter.

    Now the 15k escrow check is gone, and the Attorney says I am at default and wont return it. I did notice that this attorney cashed the escrow check after not even a week of giving them the check--which I thought the escrow check doesn't get cashed until the time of the closing....

    Is this right???? Can they cash the check right when they get it?? Can they keep my escrow check???
    Any advise is appreciated, I am at lost and feel like I was taken advantage of.

  2. #2
    Join Date
    Sep 2010

    Default Re: Escrow Check Gone.

    Can they cash it? Yes, they did obviously. The whole point of escrow is to put the funds outside of the parties' reach. You were wrong to believe the check is not cashed until closing. It is somewhat scummy to deposit it in the trust account when there is no contract.

    Can they keep it? Well that's an odd situation. It would appear that you do NOT have an accepted contract. They would appear to have no right to retain the money.

  3. #3
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Can You Recover Escrow Money if Financing Fails, With No Contingency

    Is this the gist: You were buying a business out of bankruptcy, you chose to enter into a contract that had no contingency allowing you to avoid forfeiting your earnest money if you were unable to secure financing, and your purchase failed because you were unable to secure financing?

    Who is "the attorney", and why did you escrow your money with "the attorney" rather than using a neutral third party? Are you talking about the seller's attorney?

  4. #4
    Join Date
    Mar 2013

    Default Re: Can You Recover Earnest Money if Financing Fails, With No Contingency

    Basically, what you did was agree to buy the business for X dollars with the first payment of $15,000 and then you reneged on the agreement because you couldn't come up with the money to buy the business.

    You should have put the financing contingency in the purchase contract but, instead, you took advice from the seller's attorney (bad move).

    If the bank refused the offer you wouldn't be out any money.

    Or, you should have gotten your financing nailed down before making the offer. But you didn't do that either.

    So, no, I don't see you being entitled to your earnest money back.

    I'm guessing that you didn't have a lawyer of your own to guide you through this.

    Expensive life lesson from the school of hard knocks.

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