Larry Smith-Vaniz Realty – IS THE AMOUNT OF EARNEST MONEY IN A LAND SALE AND PURCHASE CONTRACT IMPORTANT ?

How the earnest money will be handled is usually spelled out in the purchase and sales contract. You should consult with an attorney if you do not understand the purpose or disposition of payment terms or any other terms in the contract.

What is Earnest Money? Is earnest money required in order to have a valid contract? Law does not require an earnest money deposit but most sellers will. If you agree to pay earnest money and you not make the required payment, you the buyer will probably be in breach of the contract.

How much Earnest Money is required?

This amount can be negotiated. Usually, it will be a small percentage of the purchase price which may vary depending on market conditions, the price and type of property vacant land, resale of a home, new construction as well as other factors. Where does the Earnest Money go before closing? The purchase and sale agreement will govern where the earnest money will go. Also, an amount to be paid will be specified and when the payment will be made.

It should state whether the money will be held in a trust account sometimes called escrow, who will hold the money, whether it will be credited against the purchase price at closing and what happens to the money in the event the transaction does not close.

Will my Earnest Money earn interest between contract and closing? Typically not because most earnest money is held by real estate brokers in non-interest bearing trust accounts. In the event the earnest money is deposited in an interest bearing account, the buyer and seller must agree on who will receive the interest.

Be sure this agreement is included in the purchase and sale agreement and may require assistance from an attorney. Who can hold Earnest Money? Basically, any entity agreeable to the buyer and the seller but usually, it will be held by a licensed real estate broker. Buyer beware if you allow option trading nightmare seller or builder to hold the earnest money.

You risk not getting the money back should the transaction not close. Therefore, it is good practice to have the real estate broker homework spreadsheet template attorney hold the deposit since they earnest money for land purchase required by law to deposit the money in a trust account.

This minimizes the risk of the monies being used improperly. Is Earnest Money different from an option fee?

An option fee is a separate fee the buyer may elect to pay in a purchase and sale agreement to walk away from the transaction during a specified time. Earnest money may be refunded under certain circumstances; the option fee is non-refundable.

There is a federal law that gives a buyer three days to cancel a home loan commitment but it does not give the buyer the right to cancel a purchase and sale agreement and get a refund of the earnest money. The buyer is obligated to the purchase as specified in the sales contract and is not related to your right to obtain the best loan possible. Does the buyer get back the Earnest Money if the transaction does not close?

This depends on why the transaction did not close. A typical contract may contain contingencies which must be met in order for the contract to proceed. Some requirements may be: If the earnest money for land purchase does not meet his obligations, then the buyer may be stock options pfizer to a refund.

However, if the buyer breaches the contract, then the earnest money will be forfeited.

Be sure to david icke how much money does he make with an attorney to fully understand the consequences and remedies if the purchase does not close.

What if there is a dispute between the buyer and the seller on who is entitled to the Earnest Money? The real estate broker will continue to hold the monies in a trust account until the dispute is resolved either in writing or until a court decides the matter.

The broker is not allowed to pursue a claim for either party but may appear as a witness in court and make necessary documents available.

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