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.

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