Dear Mr. Azrael:In December 1997, I signed...


Dear Mr. Azrael:

In December 1997, I signed a contract with [a Howard County builder] for the purchase of a new single-family home in Owings Mills. The sales contract included contingencies that I must sell my existing home within 60 days, and that I must receive a loan approval for the contract sales price. The original contract was modified resulting in a higher sales price.

Two months prior to signing the original sales contract, I received a mortgage loan approval for an amount less than the original sales contract. In reapplying for a mortgage for both the original and later, higher sales price, I agreed to a 10 percent down payment on a 30-year conventional loan. Upon signing the contract, I provided an earnest money deposit of $5,000.

Given the inability to sell my existing home within 60 days and the notification of mortgage loan denial, I formally requested the return of all deposits, via a mutual release agreement. The release was not signed by [the builder].

[The builder] has consistently refused to return my deposit and to release me from the sales contract. It has, however, agreed to credit my deposit toward the purchase of a lower-priced [home] provided I purchase a home within one year.

[The builder] has declared me in contract default, resulting in the retention of deposit. I adamantly disagree with this! It is my belief that I am not in contract default when all attempts to sell my home were unsuccessful and my loan application was denied as a result of insufficient income for loan amount requested.

Since February 1998 I've exhausted nearly all attempts to resolve this matter with [the builder] to no avail! What can I do to effect the full and immediate return of my $5,000 deposit? What legal recourse do I have?

Chandra B. Stokes


Dear Ms. Stokes:

You believe the homebuilder must return your $5,000 deposit because your obligation to purchase the new home was contingent on your selling your existing home within 60 days and on obtaining a mortgage. These contingencies, you claim, were not met.

The homebuilder disagrees. It claims you are in default of the contract, and has asserted its right to keep your $5,000.

Clearly, you need legal advice. Your rights and obligations normally are governed by the contract you signed. So, the contract must be reviewed carefully to determine exactly what are the "contingencies." Also, your lawyer will need to have a complete understanding of the facts regarding your mortgage turndown and your inability to sell your existing home. If you do not have an attorney, I suggest you call the Baltimore City Lawyer Referral Service 410-539-3112, or the Baltimore County Lawyer Referral Service 410-337-9100.


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Pub Date: 5/24/98

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