Forfeited earnest money?

[ipermestra]

I put down $10,000 in earnest money to buy a house in Cambria, CA. My accepted offer contained a financing contingency. I required a couple of months before I could qualify for conventional financing, so my agent suggested using a "hard money" lender until then. She informed me that the hard money lender's rate was 10%. I accepted her suggestion and released the financing contingency. A few days later, after she had sent me the documents to review, it turned out that the lender's rate was actually 13%, and that the hard money loan would be collateralized against another property we owned. My wife and I determined that the loan was now unacceptable to us, and informed our agent that we wished to cancel the purchase. She told us that since we had released the financing contingency, we forfeited our $10,000 earnest money. Is this indeed the case? Is there any chance of clawing back at least some portion of the earnest money? Should I request arbitration?Many thanks! Mike

 

[army judge]

You can try to do whatever you feel is appropriate.
As far as I can discern from what you've posted, the realtor is correct.
You chose to release the contingency, and then chose not to pursue the bridge loan.
Choices have consequences.
Good luck.

 

[Michael Wechsler]

I'm with army judge on this one. And the answer to your questions is written in the words of your agreements. That is what you must review to determine whether you should discuss with your agent your options at this point and what seems to amount to going through with the purchase if you still can. It would seem that you are asking this question before actually canceling and merely conveying what you wished to do to your agent. Get an attorney to review the document if you wish, as soon as possible, and make a decision while there still is time under the agreement.

 

[Michael Wechsler]

Note - that if there is an issue as to what you were lead to do as a result of an error, that would probably be between you and the agent. Hence an issue with the agent would probably place potential liability upon the agent but not on the other parties who did not commit any error or alleged misrepresentation. You need to review all the documents and correspondence for the exact wording used and whether the error was unfortunately yours. Good luck.