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We were interested in a home only to find out that the septic system was shot and would be way out of our budget to repair. The mortgage company declined the mortgage based on the fact that the septic system failed. The seller refuses to fix the issue. She also refuses to give back our deposit. She says that we should pay to have the septic repaired and then get the mortgage. She also told us the deposit amount was the amount of the down payment ($12,500). We later learned that standard practice is to accept between $1000 and $2000.
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The answer to this depends on the contract you signed. Most contract have a mortgage contingency clause that means if you are unable to get a mortgage you are not bound to complete the deal. If the mortgage company refuses to give you a mortgage, and the seller refuses to fix the septic, then you are entitled to get your deposit back.
Answered on Jan 24th, 2014 at 3:33 PM
Diana L. Anderson, Certified Elder Law Attorney This response is not legal advice and does not establish any form of attorney/client relationship