PlayInfoBox

Home /Education /Avoiding Double-Contract Risk During a Home Purchase

Avoiding Double-Contract Risk During a Home Purchase

Tap each step to see it in order.

  1. Understand what a double contract is

    A double contract happens when a seller, or sometimes an agent, ends up entering into separate contracts with two different buyers for the same property -- something that's especially likely to happen at the preliminary deposit stage, before a formal contract is signed.

  2. Know why this risk is highest early on

    A preliminary deposit is often just a small amount meant to hold a property before the formal contract, and that gap creates an opening for the seller to accept a better offer from someone else in the meantime.

  3. Put terms in writing even at the preliminary stage

    Even when you're only paying a small preliminary deposit, get the price, the expected contract date, and the refund terms if the deal falls through written down somewhere -- a text message or a simple agreement is enough to serve as evidence later.

  4. Verify your agent's license and registration

    Checking that the brokerage is properly registered and the agent is actually licensed, through your local real estate regulator's public lookup, reduces the risk of both poor representation and double-contract situations.

  5. Move to a formal contract as quickly as you can

    Once you've paid a preliminary deposit, move to signing the formal contract and paying the full earnest money as soon as possible, since that narrows the window for a competing buyer to step in.

  6. Know what to do if it happens to you

    If you end up harmed by a double contract, you can seek a refund of your deposit and claim damages, and if a licensed agent's misconduct was involved, you may also be able to file a claim through their professional liability insurance or bonding program.

The preliminary deposit stage is the most vulnerable point

While only a small preliminary deposit has changed hands, a seller can end up signing separately with another buyer offering a higher price, so it's important to get your terms in writing and move to a formal contract quickly. This is general information, not legal advice.

Other real estate scams are worth knowing about too

If you want to learn about other ways real estate deals can go wrong, and how to protect yourself, see our guide on preventing rental fraud.

Frequently Asked Questions

Does whoever pays the preliminary deposit first always have priority?

Not necessarily -- paying first doesn't automatically guarantee legal priority. The actual outcome depends on whether a contract was truly formed and on what terms, which is exactly why it matters to get those terms written down clearly.

What should I do if I've already lost money to a double contract?

You can pursue a refund of your deposit and claim damages from the seller, and if a licensed agent's misconduct contributed to it, you may also be able to file a claim through the agent's professional indemnity or bonding coverage.