Here’s the question : If my buyer or seller cancels the transaction, who gets the deposit?
The answer : It depends. What does the contract say?
The right to cancel is found in several areas of a residential contract for sale and purchase. There are provisions in the inspection contingency, the financing contingency, title section, condominium association or HOA rider and more. The first step in addressing any issue is to read the contract. In this case, whether or not a buyer gets their deposit back depends on whether the buyer or seller had a contractual right to cancel the agreement.
The best way to protect your buyer or seller from a dispute is to read and understand the terms of the agreement. If your buyer or seller has a concern about a certain section of the contract, encourage him to seek legal counsel for clarification. Under no circumstances should you attempt to redraft a section of a form contract to address the buyer or seller’s concerns. If the modification you drafted ends up in dispute, you are headed for serious problems.
