Question: After the buyer received conditional loan approval,
the buyer was fired from his place of employment. The buyer will
now be unable to qualify for financing. The close of escrow is
three weeks away, and the seller is demanding that the buyer cancel
the escrow now and receive the return of the earnest money. The
buyer refuses. Can the seller cancel the escrow now and refund
the buyer’s earnest money because the buyer will be unable to
qualify for a loan because of loss of employment?
Answer: No. The financing contingency does not expire
until the scheduled closing date. The buyer is entitled to attempt
to qualify for financing up until the scheduled closing date.
Even if the buyer does not qualify for financing by the scheduled
closing date, the buyer can waive the financing contingency if
the buyer has the funds to close the transaction, for example,
the buyer wins the lottery.
