What If Its No Ones Fault but the Deal Just Cant Be Made

There are a lot of reasons that a deal might not go through. You may not be able to secure adequate financing. The title to the property may not be clear. There could be extensive termite damage.

It could turn out that the house is in the middle of a flood plain. The reasons are endless, and they crop up in a good many deals.

In most cases there's a way to work them out. Other financing is secured. The seller clears the title. The termite damage is fixed. You agree to accept the risk of flood damage for a lower price, and so on. In other words, the problems are solved one way or another.

However, sometimes it just doesn't work and there's no deal to be made. What happens to your deposit then?

If you've given it to an agent who has kept it in a personal trust account, you can demand it back, and in most cases the agent will immediately return it (perhaps risking the ire of the seller). If the conditions of the purchase agreement can't be fulfilled, normally you're entitled to get it back, and most agents don't want to argue the point.

On the other hand, if the deposit's been placed in an escrow account, it usually takes both the buyer's and the seller's agreement to get it out.

Maybe the seller is angry that the deal fell through and says, "I'm not signing anything." There your deposit sits, even though you're perfectly entitled to it. Unless the agent can prevail and convince the seller to release it, it could remain there for a long time!

As a practical matter, however, as soon as another buyer comes along, the seller probably will be forced to release it so as not to jeopardize a later sale.

All of which brings us back to my original point. The money you put up for deposit is at risk. The less you put up, the less you risk.

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