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Dear Forms Committee: If the transaction doesn’t close by the closing deadline agreed upon due to the lender’s delay, who is entitled to the earnest money?

In OREF 001 – Residential Sale Agreement, Section 33.2, item C states the seller is entitled to the earnest money if “Buyer fails to complete this transaction in accordance with the material terms of this Agreement.” Section 33.1, item C states the buyer is entitled to the earnest money if “any condition which Buyer has made an express contingency in this Agreement, and has not been otherwise waived, fails through no fault of Buyer.”


If the buyer fails to close by the contractual closing date, which is a material term of the Agreement, and the buyer has not delivered notice to the seller of a failure of the financing contingency, the seller would likely be entitled to the earnest money.


All comments and responses from OREF or its staff, managers, and volunteers are non-legal opinions made for general purposes. Each Forms subscriber must rely solely upon their Principal broker or personal legal counsel for specific advice and instruction. You and your client should independently confirm that the Form(s) you use are legally suitable for the purposes intended and that they are current with respect to all laws and regulations.