I gave $2000 earnest money to a woman who was selling her house?

The offer/contract was good for 30 days. My loan was not approved within the 30 days, because I had to wait on my income tax return to be completed (self-employed) and the bank needed it to show proof of income. On the 30th day, I asked her for an extension, but she said we had to "start all over" meaning that she would not count the $2000 I had already given her toward the purchase price. We live in the state of Illinois. I then decided not to sign another contract with her and she kept my money. Can I ask her to return it? Do I have any legal right to get it back? If I can't get it back, is there any way I can deduct it as a loss on my income tax return? You both are right, the handwritten contract stated in part that "the remaining $93K shall be paid within a 30 day period from this date or at closing" and "after a 30 day period from this date, this agreement shall become null and void. The earnest money shall become the property of the seller." So I have no legal recourse? And I can not deduct it as a gift/loss or anything? What's the difference between this and if I just up and gave someone on the street $2000? I may be out the money, but it seems to me that there has to be a way that I can count it as a loss. It is money I no longer have and have nothing tangible to show for it. Lessons learned.

Public Comments

What did your contract say about the earnest money? Did you have any contingency for mortgage approval?
The answers to your question lie in the language of your offer to purchase, which should have covered the terms of your earnest money. My guess is that you did a "do it yourself' offer, without legal representation of any sort. If that is the case, you can kiss your money good bye, since you probably have nothing contractual on which to demand that the money be returned to you. You made the first error by giving the money to HER, and not having it placed in an escrow account at a bank or title firm. Any offer to purchase should also have covered what happens to earnest money in your situation. Worse yet, the loss of your money is not a tax deductible loss.
Okay. Did the contract have a contingency clause for loan approval? If it did get your money back. Did it have a arbitration clause? If so arbitrate. But in either case the contract expired and she can't keep your money. Did she try to mitigate her damages? Meaning (find another buyer) Tell that woman to give you your money back or to small claims you go, plus interest. Never give money to a seller. Go through a title company or other 3rd party. And not somebody's relative. goood luck
in real estate purchasing, about 15 yrs ago, the new emphasis on Exclusive [or even non-exclusive] Buyer's broker/agent was born. Why did you not make use of one? Here are two good things for you-- a; YOUR 2,000 loss is tax deductible. and b; if you now hire your own agent and put any earnest [$] money into an escrow acct as my peers have mentioned and do not allow the earnest money to go to the seller until the escrow closes in your behalf! Also--especially in your part of the country, visit your county treasurer's office web site and see what houses they are auctioning off from non tax paying previous owners that they have foreclosed on; meaning, if you pay close attention, you can not only get your $2,000 "back" but you can save 25,000 in one purchase! I am available to guide you as a gift.
From the language you quote, you have no recourse and just gave the money to the seller. Contact your accountant to see if you can write it off as some sort of stupidity tax.