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  1. #1
    Join Date
    Sep 2016
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    Default Can a Seller Keep Earnest Money if the Buyer Fails to Report Failure of Financing

    A home seller in Maryland has been informed, three days in advance of closing, that the buyer has been unable to secure financing for the purchase. There was a contractual twenty day limit on the time the buyer had to obtain financing and, when that period ended, the buyer didn't inform the seller that he had not obtained the financing. Can the seller keep the buyer's earnest money deposit if they aren't able to close on the scheduled date?

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: Can a Seller Keep Earnest Money if the Buyer Fails to Report Failure of Financing

    Absent the buyer's exercise of valid contingencies, the buyer's failure to complete the sale under the terms of the contract may constitute a breach. If the breach is deemed material, the seller may be entitled to keep the earnest money deposit (EMD).

    If the buyer tries to recover the EMD and the parties have entered into a standard Maryland Board of Realtors form purchase contract, the contract likely has a mandatory mediation provision, meaning that (unless the parties choose to waive the requirement) the matter must be submitted to mediation before either party can take the case to court.

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