QUESTION
Can I still get deposit back from Builder?
Asked on Jul 27th, 2012 on Landlord and Tenant Law - Arizona
More details to this question:
Hello, I signed a contract in April to buy a new construction home with Pulte Home in Mesa, AZ. The house is not closing until November. I have so far put down $3,900 deposit.. I'm wondering if I can still get my deposit back based on the contract. One of the clause in the contract require buyer to deliver notice of approval within 60 days, but PulteMortgage did not give me any approval until this week (already past 60 days), can I get my deposit back based on that? (please see attached text in the contract e.p 4.1.5) Any other ways to get the deposit back? 10.2.2. Except for a termination pursuant to Sections 4.1.5, 7.10 or 1004. in which case the Deposit(s) shall be handled in accordance with that Section, Seller shall be entitled to retain all Deposit(s) made by Buyer. as liquidated damages to Seller for the breach of the Agreement by Buyer. The amount of liquidated damages is intended as a reasonable estimate of Seller's actual damages, and not as a penalty. resulting from a breach by Buyer due to the difficulty and uncertainty in ascertaining, as of the date Buyer signs this Agreement, the actual damages Seller may suffer from such a breach. whichdamages will include the cost of administering this Agreement and the cost to take the Property off the market while this Agreement remains in effect. In each instance where this Agreement permits Seller to retain Buyer's Deposit(s) as liquidated damages, Buyer shall be deemed to have waived allchallenges to the enforceability of said liquidated damages provision. This waiver shall include, without limitation, any contention that the liquidated damages provision constitutes an unenforceable penalty, or that the liquidated damages do not bear a reasonable relationship to Seller's actualdamages.4.1 FINANCING THE PURCHASE OF THE PROPERTY. Unless otherwise indicated on an Addendum or Change Order signed by both parties and subject to the terms and condition
1 ANSWER
I think that the last part of your "Question Details" was cut off. Your right to a refund will be found in your purchase contract. It sounds like your purchase was contingent upon your loan approval. You were approved for the loan, so that is not a basis for you canceling the contract. The question is whether the seller's lender failure to notify you of loan approval within sixty days provides you with a basis to cancel the contract. That part of the contract language was cut off in your Question Details, so look there first. My guess is that it contains language that lets the seller extend that period if it wishes, which (of course) it would. You did not include facts or language for Sections 7.10 or Section 1004, but Section 10.2.2 allows for termination of the contract under those sections also, so you should review those sections to see if you have a factual basis for terminating the contract under those sections. Assuming those sections don't apply, then the language you quoted would allow the seller to let you cancel the transaction, but keep your deposit. Although that may seem harsh, keep in mind that you signed a contract to purchase the home, received loan approval and then you changed your mind.
Answered on Aug 07th, 2012 at 10:13 PM