How do I get my earnest money back?

I was under contract to buy a house but the deal fell through because I was unable to obtain financing. There was a clause in the contract that stated if I was unable to get financing, the deal is scrapped and I will get my earnest money back.

But the seller of the house still has not signed for the release of my earnest money. How do I get it back? Do I take him to small claims court? Who do I have to sue?

Was this done through an agent/broker? If so they usually hold the funds until the deal is closed, if the deal falls through they will release it back to you within a short period of time. If this was a “kitchen table” deal, you will have to keep requesting until you get it back. You may have to end up in court, but I would keep asking for it back. Send a certified letter stating you want it back. Also contact a lawyer for further advice, they can help lead you in the right direction and will know the laws in your state.


You probably don’t have to sue anyone. If you please, give me a few more details.
-Did you use a buyers agent?
-Was the property in a multiple listing service?
-What state are you in? Is the property in the same state?
-Did the lender provide you with a denial letter?
-Was the deal contingent on your financing?
-What leads the listing agent to believe he’s intitled to keep your $?
-Did you have a written contract?

If it was me, I would have my agent send the mortgage denial letter and a mutual release to the listing agent. If this didn’t work, I would calmly address the issue with the listing agent’s principal broker. If still no response, I would call principal broker and give him until the end of the day before you file a formal complaint with his local board. Most boards have a process in place to handle these issues. Let me know how it turns out.

Keep the peace.

Below are the answers to the questions

[b]Just on the side note, I was preapproved for the loan but after further review, the loan company decided I took too many deductions in my 2004 taxes and used that against me. The sellers agent claims that I should have known I would not qualify for the loan which is completely untrue.

How do I file a complaint with the local board? Is it the sellers agent fault? What if the sellers of the house refuse to sign the release?[/b]


This issue comes up very often. When a deal dies close to a closing date, certain parties to the transaction get so mad it clouds good judgement. It’s really a simple contractual matter. If it was me, I would involve the listing agents principal broker. I would have my agent compose a letter to accompany the mutual release. The letter would reference the NAR code of Ethics and that you would be delighted to take the matter downtown for arbitration. Your agent or his broker can explain the process. Since I can’t give you legal advice, it’s advisable to run all this by a real estate lawyer. If you don’t know one, have your agent recommend one.

It really has nothing to do with your real estate broker or real estate agent. In some states brokers hold EM in many the title company does. Either way the broker and title company are not party to the contract and can only do what the contract allows. In the state of Texas, there is a TREC promolgated contract for third party financing. In that addendum to the purchase contract the buyer states when they will receive approval by, if they do not notify seller they are unable to get financing by the time stipulated they at the very least forfeit their EM.

Who else here does not like earnest money?

That is why I have used the same 4k for the past 5 years!

I haven’t paid earnest money on a private rental property deal here yet. The HUD I bought required $500…but, that’s here…


If the escrow/title company holds the money and does not have specific instructions in the contract that allows them to dispurse the money, then the money will be tied up until the parties to the contract come to a written agreement.

Since I am not a lawyer, I can’t provide legal advice and what I am about to say may be wrongs, so check with someone that can provide legal advice.

The title company may have to file an interpleader action. This will force the issue to the courts who will decide what happens to the money. However, that will take time. Talk to the seller and see if you can come to an agreement to get your money back or at least most of it.