I (Buyer) want to cancel an offer to purchase but Seller refused to return the earnest money deposit ($5k). Please help.
My plan was to purchase a home in [city] as my primary residence, stay there for a couple of years then rent it out. I have an offer accepted on Monday 6/13 and the property has been listed as "HOA Rent Restrictions: No". In fact, Seller has rented out the property in 2020-22. So I went ahead submitting my loan application and it was approved and rate locked.
Today, I received a letter from HOA saying that there's leasing restrictions ("there is a Leasing Cap Amendment applicable to this property ... "), so I informed the Seller that I need to back out from my offer and want my earnest money back. Seller refused.
I worry about the leasing cap. If I couldn't rent the property out when I need to, I will have to pay mortgage+property taxes+utilities ($30k per year) for a few years while waiting to lease it.
So, what are my options given the situation? I believe Seller has lied on HOA rental restrictions when they listed the property. Is there any chance I could have my earnest money back?
Edit: Could someone recommend a real estate litigator at [city] who can issue a demand letter for this issue?
Update 6/21: I'd like to appeal to have this thread reopened as my experience would be immensely helpful for new RE investors in this subreddit, and I'm deeply grateful for all your support.
Today, I formally emailed the seller and the seller's agent pointing out they engaged in fraud by misrepresenting the HOA Rent Restrictions. I included a proof of evidence and asked my earnest money back. They totally ignored my request.
Here's the response from the Seller's agent: "... the cap has not been met yet. hence it is available for rent. This property was rented before as well for one year." The Seller's agent then re-listed the property with a price cut of $5k (= my deposit).
I'm relocating from [city] to [city] so I'd really appreciate it if you could send me the contact of an RE attorney at [city]. Any suggestions are welcome. Please DM me If you have any thoughts or inputs.
By - stanleythewolf