Choicerealty Jun 16, Anne Sadler , Anne's Blog , Home page , Homebuying Process 0 comments. What is earnest money? Earnest money is the amount of money a buyer puts down to accompany an offer to purchase real estate. The earnest money deposit is that consideration when a buyer makes an offer. Without earnest money deposits, buyers could make offers on multiple properties leaving the sellers with little recourse if the buyers back out of the contract.

Who holds the earnest money is also negotiable, but in this area it is common practice for the listing office to hold the earnest money in their trust account. The escrow or trust account is a non interest bearing account where earnest money deposits are held until the property closes or the contract is terminated. At closing, the earnest money deposit becomes a credit to the buyer for any closing costs they may have, or it is subtracted from the purchase price of the property.

Who gets the earnest money then? Earnest money is not like a security deposit. How this situation gets resolved will depend on what it says in the contract for purchase that the buyer and seller entered into.

That 'Earnest' Money Can Draw Interest - The Washington Post

Escrow accounts are regulated by Illinois License Law and trust account holders must follow the law when releasing earnest money funds. Earnest money can only be released when the buyer and seller agree who will get the money and both sign off on the proper form.

What Everybody Should Know About Earnest Money Deposits | North Georgia Blue Ridge Real Estate WebBlog

Without both signatures, the money cannot be released. If the buyer and seller cannot agree, it becomes a legal matter and attorneys must be retained by the. If no resolution occurs, or if one of the parties cannot be located the money will be turned over to the State Treasurer and the parties will have to contact the State for resolution.

Generally speaking, if the contract has buyer contingencies which the buyer is unable to meet after a good faith effort, our contract provides for the return of the earnest money to the buyer. If the buyer backs out for any other reason, the seller may be entitled to keep the earnest money. Always read the contract for purchase before signing to determine what the contract provides for in respect to the earnest money deposit.

If either party ends up filing a lawsuit for the return of the earnest money, the losing party may be responsible for the legal fees as well as losing the actual deposit funds.

Knowing the rules about earnest money before you enter into a contract will hopefully eliminate disputes if the property does not close. Remember that you are entering into a legally binding contract and, as always, you should consult an attorney before you sign any contracts.

Earnest Money | Choice Realty

Earnest Money Choicerealty Jun 16, Anne Sadler , Anne's Blog , Home page , Homebuying Process 0 comments What is earnest money? If the buyer and seller cannot agree, it becomes a legal matter and attorneys must be retained by the parties to try to resolve the issue.

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