Buyer is Walking Away From a Deal- Is Forfeiture of Earnest Money in Wisconsin the Only Remedy?
Whether you can give the earnest money to the seller and walk away from a property purchase in Wisconsin depends on the specific terms and conditions of your purchase agreement and the circumstances surrounding your decision to back out.
Earnest money is a deposit made by the buyer to show their commitment to purchasing the property. It is usually held in an escrow account and applied toward the down payment or closing costs at closing. If the transaction proceeds as planned, the earnest money is typically applied to the buyer's costs in the transaction. However, if the buyer backs out of the agreement without a valid reason or contingency, the earnest money may be forfeited to the seller as compensation for the time and resources they have invested in the transaction.
Here are some factors to consider:
Contingencies: Your purchase agreement may include contingencies that allow you to back out of the deal under specific conditions, such as financing, inspection, or appraisal contingencies. If you have a valid reason to terminate the contract based on one of these contingencies, you may be able to recover your earnest money.
Negotiation with the seller: If you want to back out of the purchase without a valid contingency, you may still be able to negotiate with the seller. They may agree to release you from the contract and return your earnest money, or they may keep the earnest money as compensation for their time and effort. The outcome will depend on your specific situation and the seller's willingness to negotiate.
Legal consequences: If you back out of the purchase without a valid contingency or without the seller's agreement, you may face legal consequences. The seller could potentially sue you for breach of contract or specific performance, seeking to force you to complete the purchase or pay damages.
It's essential to consult with a real estate attorney or professional familiar with Wisconsin laws and regulations to better understand your options and the specific terms of your purchase agreement. They can help you determine the best course of action based on your situation and the contract terms.