Selling my house, buyer backed out after his option period and wants his earnest money back. Do I have to give it back?
I'm selling my house, and I had a buyer. We signed the contract, did the inspections and all the usual stuff, and made it through the option period. I thought this was a done deal, but he just backed out and is demanding his earnest money back. Do I (or the escrow agent) have to give it back or not? Keep reading for the answer.
For a definitive answer, any attorney would need to know more of the facts and review your contract, but buyers usually forfeit their earnest money deposit if they terminate after the option period is over. This is normally considered a default on the part of the buyer, and the seller may elect to keep the earnest money as liquidated damages. This is a standard provision in the Texas Real Estate Commission's (TREC) contract. Alternatively, a seller might be entitled to specific performance which, in this case, means forcing the buyer to go through with the purchase, or to perform as agreed.
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