Your earnest money represents your financial commitment to closing on the property that you intend to buy in Raleigh. Like most, you likely assume that if the sale falls through, you are entitled to have that money returned to you. Yet what if the seller attempts to keep it? Are there situations where he or she is legally entitled to do so?
Putting a property under contract establishes actual contractual terms that must be followed. Thus, a failure on your part to fulfill any of those terms would constitute a breach of contract. Should that happen, then yes, the seller can keep your earnest money. It essentially serves to cover any financial loss he or she might have incurred while having the property off the market waiting for your deal to close. Knowing this, it is vital that you understand the areas in your real estate purchase agreement that open the potential for a breach of contract.
The website Realtor.com lists the more common ones. A seller may try to expedite a sale by placing hard dates within the contract (he or she may even push to include a “time is of the essence” clause, which makes your proposed closing date legally binding). If you are unable to meet any of those date requirements, you are in breach.
The contingencies of sale worked into a contract also present a seller with a chance to keep your earnest money. He or she may ask you to waive certain contingencies (which is often common for properties sold “as is”). If you agree, it restricts your ability to back out of the deal for what many may deem to be valid reasons. Thus, you should carefully consider whether complying with such a request is truly in your best interest.