As per “Contingency Removal No. 1” which the buyer has signed:
Once all contingencies are removed, whether or not Buyer has satisfied him/her/itself regarding all contingencies or received any information relating to those contingencies, Buyer may not be entitled to a return of Buyer’s deposit if Buyer does not close escrow. This could happen even if, for example, Buyer does not approve of some aspect of the Property or lender does not approve Buyer’s loan.
As per the “Amendatory Clause and Real Estate Certification Form” which I have yet to sign due to my concern that the buyer can keep his earnest money if the final appraisal does not meet the minimum stated:
It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser has been given in accordance with HUD/FHA or VA requirements a written statement by the Federal Housing Commissioner, Veterans Administration, or a Direct Endorsement lender setting forth the appraised value of the property of not less than $___________. The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value nor the condition of the property. The purchaser should satisfy himself/herself that the price and condition of the property are acceptable.”
My real estate agent as well as the loan officer in charge of the FHA loan have both reassured me that the original contingency removal terms stand & supersede the Amendatory Clause’s saying that the purchaser shall not incur any penalty by forfeiture of earnest money deposits or otherwise. They both tell me that (assuming I sign the Amendatory Clause) his earnest money is still subject to forfeiture even if the appraised value required is not met. Is this true?