Question:
I paid a deposit to purchase a house, but afterward the seller changed their mind and no longer wants to sell the property. Am I entitled to request a refund of the deposit and compensation?
Answer:
Pursuant to Article 328 of the 2015 Civil Code, a deposit is a transaction whereby one party delivers to the other party a sum of money or valuable property within a certain period to secure the conclusion or performance of a contract.
The law provides the following legal consequences regarding deposits:
- If the depositing party refuses to enter into or perform the contract, the deposited property shall belong to the receiving party;
- If the receiving party refuses to enter into or perform the contract, such party must return the deposited property to the depositing party and pay an additional amount equivalent to the value of the deposited property, unless otherwise agreed by the parties.
Accordingly, where the seller is the deposit-receiving party but later refuses to sell the house without a force majeure event or any other agreement between the parties, the buyer has the right to request:
- The return of the full deposit amount; and
-Payment of an additional amount equivalent to the deposit amount (commonly understood as a “double deposit penalty”).
However, in order to protect their legitimate rights and interests, the buyer should retain all relevant documents, including the deposit agreement, payment receipts, messages, emails, and other related evidence as a basis for resolving any dispute that may arise.
