Author: Heather Connor, Realtor
There are three things that could happen should you cancel your contract.
Depending on the circumstances, here are the things that could happen to your earnest funds when you cancel your contract. Let's discuss quickly how these may occur:
#1 You get your earnest funds back
This occurs when you have correctly canceled your contract and is usually due to new information that you have found during your due diligence process. You exercise to cancel, utilizing what we call a contingency. Your agent will send a notice of termination which will state which contingency you are utilizing. And this can include items such as appraisal inspection, ILC survey, association documents, etc.
#2 You lose your funds and the seller gets to keep them
This occurs when you have failed to send the proper notice of termination or you did not send it in time for that particular contingency. In competitive markets, you’re seeing that buyers are waiving all contingencies when they’re cash buyers, which means the funds are non-refundable from the very beginning.
#3 Your funds go into mediation or court
The outcome of the mediation or the court ruling will ultimately decide who gets to keep the earnest funds.