Simply put, there are no non-refundable deposits in standard real estate purchase contracts – you either have a contract or an option. If it is a valid purchase contract, specific provisions of the agreement determine whether deposits are refundable or not.
Adding a provision to a standard real estate purchase contract calling for a non-refundable deposit to be passed through from buyer to seller may not be enforceable, unless the agreement is actually an option form. An exception to this is for builders who may keep some deposits under certain circumstances if the buyer’s payments were used to purchase upgrades.
Further, if a homebuyer wants to add a clause in an agreement to purchase real estate, reserving the absolute right for them to cancel at any time, for any reason, before acceptance (such as in an agreement to purchase a short sale property, which may take a fairly long time for a bank to respond), the agreement might not be considered a valid purchase contract, so this practice is to be avoided.
Real estate legal matters can be complex, particularly in difficult times when short sales and foreclosures are commonplace. For this reason, Alain Pinel Realtors has mandatory twice-a-year agent training by a risk management attorney. Agents in smaller brokerages usually do not benefit from such regular updates of case law and best practices, which should be a consideration for you when selecting the best Realtor to best represent your interests.
Real estate agents do not practice law and do not give specific legal advice so you should consult your attorney for complex matters that deviate from standard forms.
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Rick Bonetti | Alain Pinel Realtors | Saratoga, CA | 408-857-8800 | DRE #01237009