Seller Is Entitled to Keep Down Payment

Real Estate Weekly, August 30, 2000

Plaintiff contracted to buy a house from defendant. In a mortgage contingency clause, plaintiff was to promptly apply for a mortgage, and, if after cooperating in good faith with lender's requirements, no loan was obtained, plaintiff could cancel the contract by giving notice within five business days after the commitment date. An extension was given when plaintiff failed to get a mortgage by the first commitment date. By the second date, no mortgage was obtained and no further extension was given in writing. Seller sent a letter that time was of the essence. After a mortgage was denied for insufficient income, plaintiff sought but was denied return of her down payment. The court ruled that seller was entitled to the down payment, as plaintiff failed to get an extension of time or notify seller of the inability to obtain a mortgage within the time constraints.

NY Law Journal