Private party will not return good faith deposit to hold vehicle

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mark66

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My 19 year old son gave $800 to a private party as a good faith deposit to hold a vehicle until he could check to see if he could obtain financing. The person that recieved the money wrote out a reciept that says " Recieved $800 from "My Son" for partial payment for 1990 Chevy truck". Signed "Private Party Name"
The date was also on the reciept. My son went to the bank and was told he could not obtain financing without a co-signer due to his age and the fact that he does have any credit at this time. My son, knowing that I would not co-sign for him, went back to the private party and told them that he could not obtain financing, and wanted his deposit back. They refused. This all happened within a 24 hour period. He wants to take this to small claims court but does not know whether or not he has a case. Does he have a case?
I believe there is a law that protects the buyer in this case if going through a dealer, but I'm not sure when going through a private party.
 
Generally a good faith deposit is non-refundable. I afraid your son did not make his intentions clear as to what the deposit was. The private owner saw it as a earnest money deposit insuring purchase, and your son saw it as simply proof that he was serious about trying to purchase the vehicle. It's an honest mistake, probably on both parts.

What is the private seller saying?

I don't know if the law you are talking about to protect you from "dealers." If money was seen as earnest money with a dealer you would lose it for not purchasing the car. Dealers are usually handling the financing though, so they are in control of whether a deal closes or not.

This is a question of whether or not there was a contract to purchase. If there was, your son must purchase the vehicle or lose the money. If there was not, the seller must return the money. One might consider giving the seller $100 for his trouble (it will no doubt cost you at least that to sue).

Here is how you determine if there was a contract. Were all the terms settled? Sales price settled? Closing date settled? Delivery date settled? Did he do a bill of sale? Besides the receipt for the deposit, was their any writing at all?

I believe if your son sues he will prevail. In his favor:

1. I believe there was a misunderstanding between the parties so no contract existed.
2. I don't believe there was a bill of sale, delivery date, closing date, or any other writing between them.
3. The time frame was very short.
4. I do not believe the seller will be able to argue that he was unduly damaged.

Try to work things out with the seller; if not sue him. In the future, work things out with the bank prior to shopping for a car. You can not usually get a check from the bank, but they can tell you yes or no on the credit package. Good lesson learned for your son.
 
No terms were settled, no bill of sale was written, no final purchase price was settled on, and no delivery date was set. Nothing else in writing changed hands. The seller has been very difficult and just refuses to refund the money. I believe the money was given to one of the sellers children and was spent. I have even heard that the vehicle in question has been traded or sold, so even if he wanted to purchase it now, he couldn't.

My son would probably be willing to give up a hundred dollars to settle, but I don't believe the seller is going to be willing.

I really appreciate your input. this helps a lot.
 
Because we are only talking about the vehicle being off the "market" for just 24 hours, I think it would be a good idea for your son to consider a lawsuit against the seller.

It would be one thing if the product (the car) had been off the market for several days or weeks but keeping $800 to "hold" the car for just one day seems excessive....and I suspect it would seem excessive to a judge also.

Such lawsuits are typically heard in Small Claims court where an attorney is not required and filing fees are minimal.

Gail
 
Another comment on the filing fees. In your suit request that the judge throw the costs of filing the suit on the defendant. He/she often will do just that if the Defendant loses.
 
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