Can I fight losing my earnest money over an HOA issue I didn't cause?

I wouldn't assume you're automatically losing the earnest money. The fact that the lender declined to fund because of the HOA's delinquency rate doesn't, by itself, determine who gets the deposit. The purchase contract and its financing/condo provisions control. I'd have your agent or a Georgia real estate attorney review the contract immediately, especially the financing contingency, appraisal provisions, condominium/HOA disclosures, due-diligence period, and any deadlines for obtaining loan approval. There may be language that protects you if financing becomes unavailable through no fault of your own, but that depends entirely on the agreement you signed. I'd also find out exactly when the lender discovered the HOA issue and whether the lender had previously issued a preapproval or conditional approval. Ask the lender for written documentation explaining why the loan couldn't be funded and when the HOA delinquency problem was identified. That timeline could be important. The title company holding the earnest money generally isn't the party that decides who is legally entitled to it. If the parties disagree, the escrow holder may require mutual written instructions or follow the applicable dispute procedure before releasing the funds. So I wouldn't accept "the contract expired, therefore you lose the deposit" as the final answer without having the contract reviewed. Because this is Georgia and you're dealing with potentially significant money, I'd get a Georgia real estate attorney involved quickly, particularly if the seller is refusing to release the deposit. Don't sign a release giving up the earnest money until you understand your rights. And going forward, condo financing deserves extra due diligence. Lenders can evaluate the financial condition of the HOA and the project itself, not just your personal credit and income. Your experience is a good example of why a buyer should ask the lender early in the process whether the condo project meets the lender's requirements. You may have a path to recover the earnest money, but I wouldn't make that determination from the lender's denial alone. Get the contract and the lender's written explanation in front of a Georgia attorney as soon as possible. Juan Picos Real Estate Agent JohnHart Real Estate

Marcus, you're not cursed, and I'm sorry this happened to you twice. You are dealing with Fannie Mae's current condo guidelines that require that no more than 15% of the units be 60 days or more delinquent on HOA assessments for a full project review. Your lender's concern about the HOA delinquency rate is an underwriting issue, and it is a problem with the condominium project, not necessarily with your financial qualifications. HOA delinquencies and assessments should be verified before making an offer, so you know going in that the HOA does not have any issues. You may have a legitimate basis to fight for your earnest money, especially if your contract included a financing contingency. The Georgia Association of REALTORS revised its financing contingency forms specifically because buyers were losing earnest money after discovering late in the transaction that their condo development could not obtain lender project approval. Under those provisions, a buyer may have the ability to terminate and recover earnest money up to the closing date if the lender cannot approve the condominium project or its master insurance policy, provided the project approval issue is what prevents the mortgage from being made. I would not automatically accept the statement that "the contract expired, therefore you lose your deposit"; your contract controls these terms. Get a copy of your signed purchase agreement and every financing/condo contingency; a written loan denial stating specifically that the financing was denied because of the HOA delinquency/project approval issue (Georgia's 2026 GAR financing forms were revised to require the denial letter to state the reason for denial); The HOA questionnarie or documentation showing the delinquency percentage; and any emails showing when your lender discovered the problem and when you requested an extension. Then have your agent's broker or a real estate attorney review the contract before agreeing to surrender the deposit. If your broker is holding the money, Georgia rules do not simply say the money automatically belongs to the seller when a closing date passes; disbursement can depend on the contract, written agreement of the parties, a court order/interpleader, or the holder's reasonable interpretation of the contract. If a closing attorney or title company is holding it, the separate earnest money escrow agreement should be reviewed. Bottom line, you are not necessarily out the money. If the lender refused to fund specifically because the HOA failed project eligibility requirements and your financing contingency contains the current Georgia project approval protection, you may have a strong argument for the return of your earnest money. The fact that this happened one day before closing makes getting the lender's written explanation and having the actual contract reviewed especially important.

Marcus, this is going to depend on how your contract is worded. If you have a real estate attorney, I suggest speaking with them to determine your options. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Marcus, you are not cursed, you are hitting the same rule twice: Fannie Mae will not buy a loan in a condo project where 15 percent or more of the units are 60 or more days behind on HOA assessments. That is a project eligibility standard, it has nothing to do with you or your credit, and it will kill the next loan too if you go back to the same building. That is the first thing to understand, because it changes what you do next. On the deposit. The title company is right that they cannot release it unilaterally, but they are answering a different question than the one you asked. Escrow holders do not decide who gets the money, they hold it until both sides sign a release or a court tells them. So "we don't have to give it back" means "we are not allowed to decide," not "you lose." What decides it is your contract. Look for these, in this order: Was your financing contingency still in effect when the lender declined, or had you already removed it? This is the whole ballgame. If it was live, a denial for a reason outside your control is normally exactly what that contingency exists for. Does the contract have a separate condo document review or HOA document contingency? Many do, and the delinquency rate shows up in the resale certificate or the lender questionnaire. If those documents came to you late, your deadline may not have run when you think it did. Was there a written extension? "One day away from closing" and "contract ended" in the same story often means the closing date passed while the lender was still working. If the seller let the date pass without sending a formal notice to perform or a demand, that matters in many state forms. Get the lender's written denial naming the delinquency rate. That document is your evidence, and lenders will provide it. A one-line adverse action notice is much more persuasive to a seller than your account of a phone call. Two things for next time, and they will save you a third round of this. Before you write an offer on any condo, have your lender pull the project review and the HOA questionnaire before your contingency period expires, not during underwriting. Most people find out at the end. You can find out at the beginning. Ask specifically about the delinquency percentage, the reserve funding level, the percentage of units that are rentals, and whether there is pending litigation. Those four kill more condo loans than anything about the buyer. And know that this is getting tighter, not looser. Fannie Mae is retiring the streamlined condo review path this month, which means full project review on essentially every established project over ten units. Buildings that squeaked through before are going to start failing. If you love that specific building, the path is a portfolio lender, meaning a bank or credit union that keeps the loan on its own books and does not have to meet Fannie's project rules. They exist, they are usually local, and the terms are often a little worse. That is the real trade. I am a real estate professional, not an attorney, and a deposit dispute is a legal question, so if the seller will not sign a release it is worth an hour of a real estate attorney's time in your state. I am Zoltan Peresztegi and I sell homes in Los Angeles and the South Bay, and I have watched this exact rule end deals in Torrance and San Pedro buildings. If you are in the Palos Verdes Peninsula or South Bay area I am glad to help you vet the next building before you write. If you are elsewhere, tell me where and I will connect you with an agent in my network who knows the condo inventory there. Zoltan

Marcus, you may have grounds to fight for your earnest money, but it will depend heavily on the financing contingency and the deadlines in your contract. If the lender denied the loan because the HOA failed to meet lending requirements, that can potentially qualify as a financing issue rather than a default by you. I would have a Georgia real estate attorney review the contract, lender denial and timing before agreeing to forfeit the deposit.