Earnest Money Deposit Alternatives - Posted by Larry Bohen

Posted by Rich-CA on April 23, 2007 at 18:05:32:

The money SHOULD be in an escrow account. In many states it is required that both parties sign to release the earnest money. The next step should be a demand letter, sent by an attorney, using a mail service where you can show receipt (or refusal) of the letter. You may need to go to small claims court to recover your funds. Prepare complaints with the Board of Realtors and Better Business Bureau regarding refusal to return earnest money when they failed to deliver a signed contract.

As a rule, no earnest money should be provided unless you have a signed sales contract. In fact the normal sequence is:

(1) Buyer submits an offer in the form of a signed sales contract.
(2) Seller accepts offer by signing sales contract and returning it to buyer (or buyer’s agent).
(3) Escrow account is opened with Earnest Money funds by third party such as Title Company or lawyer. In some states this is done by the RE agent.
(4) Inspection of property takes place. Buyer then demands repairs.
(5) Seller can make repair, offer money back or refuse each individual repair item.
(6) If seller’s actions are acceptable, Buyer signs off.
(7) Financing obtained and final walkthrough to ensure repairs are made as agreed. Review HUD-1 carefully to make sure you get all the credits agreed to.
(8) Close deal and obtain keys after ownership change is recorded.

In some states the agents handle the earnest money, but where possible it should always go to the Title company. It does not benefit either party to shortcut the process. These steps are a minimum to ensure you watch your own interests - nobody else is going to watch them for you.

Earnest Money Deposit Alternatives - Posted by Larry Bohen

Posted by Larry Bohen on April 19, 2007 at 12:15:04:

I am considering making an offer on an office building in Vermont. I am leary of depositing my earnest money with the selling broker.

Do I have to deposit the earnest money with the selling broker?

What other alternatives do I have?

Re: Earnest Money Deposit Alternatives - Posted by Rich-CA

Posted by Rich-CA on April 20, 2007 at 23:47:16:

Is the transaction being handled by a Title company? Is there an escrow account? If so, they funds should go directly there. if not, you may have no choice.

Re: Earnest Money Deposit Alternatives - Posted by Connie Chambal

Posted by Connie Chambal on April 23, 2007 at 15:08:01:

I gave the realtor and earnest money deposit. Upon failure to provide me with a fully signed purchase agreement in a timely manner (they were over 3 weeks), I requested that the deal be cancelled and my money refunded (1 1/2 weeks ago). I have yet to get my money. Is there a time limit the realtor has to refund my money? My understanding is that it is sitting in an escrow and should not take this long.