Dear Mr. Feichthaler:
I recently signed a contract to buy a home in Cape Coral, and I needed financing to make the purchase. My Realtor prepared the contract and it had the normal financing language in it. I applied for the loan and everything seemed fine. About 5 days prior to the sale, I lost my job as a local store manager. As a result, the bank would not release the loan funds, and I was unable to complete the purchase. I had made an escrow deposit of $7,500, which I thought I would get back if I couldn't get financing. The seller will not agree to give it back, saying the contract says she gets to keep it. Aren't financing contingencies iron-clad?
- Matt F.
I am sorry to hear about the recent loss of your job, and I hope you have found suitable employment by the time I write this. Many of my answers revolve around the wording of the contract. When it comes to financing, there are several different forms in circulation that address the matter. Some may provide that, as long as you make a good faith effort to obtain financing, you can cancel the contract and get your money back if the financing falls through. However, the standard contract will generally provide for certain notice and timing provisions that would impact your ability to have a return of escrow.
For instance, one form provides that, if notice is not given that a loan cannot be obtained within 7 days of the closing date, the seller can keep the entire amount. Others may only be contingent on a "loan commitment," rather than an actual loan. In your case, you may have received the loan commitment from the lender, then they made the determination not to release the funds after the loss of your job. Unfortunately, that would not be surprising, as most loans require steady employment so the lender can be assured repayment. If this occurred, you may have no contingencies to close, and the seller may be entitled to keep it.
Escrow disputes can be annoying, expensive and the winner may be able to obtain attorney's fees from the losing party. I always advise my clients to attempt to resolve such disputes with the other party quickly and fairly when possible. Under the circumstances, if you are, in fact, responsible to allow release of the funds, you may want to call the seller and see if they will agree to only retain the amounts they need to compensate them for holding the property longer than expected.
If that doesn't work, you may want to contact an attorney to assist you and review the specifics of your contract.
Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continued his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest from 2011-2015, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.