The Puerto Rico Court of Appeals recently upheld a lower court's decision that requires a real estate broker to return a $20,000 deposit to a buyer whose financing was denied. The case, Steven Rinardy Rivera Santos v. Fernando Escudero Rodríguez Y Otros (Docket TA2026AP00598), highlights the importance of contractual obligations and the rights of buyers in real estate transactions.

This ruling affects not only the parties involved but also sets a precedent for similar cases in Puerto Rico, emphasizing the need for clarity in real estate contracts and the protection of buyers’ rights when financing issues arise.

Background

The dispute arose between Steven Rinardy Rivera Santos and Fernando Escudero Rodríguez, a real estate broker, along with Jovan Corujo Vázquez, who was also involved in the property transaction. Rivera Santos had entered into a purchase option contract on April 24, 2024, to buy a property in Río Grande, Puerto Rico, for $500,000. As part of this agreement, he paid a $20,000 deposit, which was held in an escrow account managed by Escudero Rodríguez.

According to Rivera Santos, the purchase was contingent on obtaining financing. However, after he applied for a loan, the bank denied his request. Rivera Santos claimed that he was entitled to the return of his deposit because the sale did not go through due to circumstances beyond his control, specifically the bank's refusal to provide financing. He argued that the contract stipulated that he should receive his deposit back under such conditions.

Escudero Rodríguez, on the other hand, contended that the contract allowed him to retain the deposit if the buyer was responsible for the financing denial. He claimed that Rivera Santos had applied for a loan exceeding the property's appraised value, which he argued was a factor in the bank's decision to deny financing.

The Ruling

On April 23, 2026, the Court of First Instance ruled in favor of Rivera Santos, granting his motion for summary judgment. The court found that there were no material facts in dispute and ordered Escudero Rodríguez to return the $20,000 deposit, minus a $200 administrative fee. The court determined that the financing denial was not attributable to any actions by Rivera Santos.

The court stated, "the denial of financing came from the banking institution and was not due to actions attributable to the buyer, Rivera Santos."

Escudero Rodríguez appealed the decision, arguing that there were indeed facts in dispute that warranted a trial. However, the Court of Appeals reviewed the case and confirmed the lower court's ruling, stating that the evidence presented did not show any material controversy over the facts.

Impact

This ruling reinforces the principle that buyers in real estate transactions have rights that must be respected, particularly when financing issues arise. It clarifies that if a buyer is denied financing due to no fault of their own, they are entitled to the return of their deposit as stipulated in their contract. This decision may influence future real estate contracts and disputes, encouraging clearer terms regarding financing contingencies and the handling of deposits.

The court's decision also serves as a reminder to real estate professionals about their obligations under the law and the importance of adhering to contractual terms. Failure to comply with these terms can lead to legal consequences, as seen in this case.

What's Next

While Escudero Rodríguez has the option to appeal the decision to the Supreme Court of Puerto Rico, it remains unclear if he will pursue further legal action. There are currently no related cases pending that could impact this ruling.