Getting back earnest money

[Peter Mckernan]

Hello all,

I want to throw this out to the BP community and see if we have a foot to stand on. So, two business partners and I were just in escrow on a listed "duplex." We are 25 days in on a 60 day escrow. The escrow is 60 days due to getting a tenant out of the mother-in-law's quarters. We have removed contingencies as well.

This is where I will shorten the story to get to the point quickly. They listed the property as a duplex. The property had three structures on the lot. One was the front unit, a 2/1; the second unit was a separate mother-in-law's quarters, a 1/1; and the third structure was separate and it was a garage. We got an inspection and appraisal done. The appraiser stated that the unit in back was never permitted for a second unit (so, it was a SFR).

We have been working with the city and sending our GC down to the city planning department to see how we can make the second unit a 2/1 and a portion of the garage a 2/1. We were planning on permitting it all legally to be able to get the cash flow and later down the road sell it as a true triplex. The GC was told just two days ago by the senior city planner that due to how the lot was developed it would never be legally permitted for more than a SFR. This is because the property was developed prior to 1955 and that is when they put some more requirements into the city planning code that this lot does not fit within.

So, with all that information, do we as buyers have backing to get any of the deposit back since it was listed as a duplex and we finally figured out that we will not be able to make it a duplex as listed, or even make it a triplex? I know we have lifted contingencies, and that is where we will have the biggest problems getting any money back.

Thanks,

Peter