EARNEST MONEY
1. What is Earnest Money?
Earnest money is a deposit made to a seller that represents a buyer's good faith to buy a home. Simply put, it is a deposit a buyer makes on a home they want to purchase.
A contract is written up during the exchange of earnest money that outlines the conditions for refunding the amount.
2. The benefit of Earnest Money
The money gives the buyer extra time to get financing and conduct the title search, property appraisal, and inspections before closing. The buyer might be able to reclaim the earnest money deposit if something that was specified ahead of time in the contract goes wrong.
3. Can Earnest Money be Returned?
- Earnest money is always returned to the buyer if the seller terminates the deal. Earnest money gets returned if something goes wrong during the appraisal that was predetermined in the contract.
- The earnest money would be returned if the house doesn't appraise for the sales price or the inspection reveals a serious defect. This could include an appraisal price that is lower than the sale price, or if there is a significant flaw with the house. But the point to note is that these contingencies must be listed in the contract.
4. When is Earnest Money not Refundable?
The earnest money would be returned if the house doesn't appraise for the sales price or the inspection reveals a serious defect. This could include an appraisal price that is lower than the sale price, or if there is a significant flaw with the house.
But the point to note is that these contingencies must be listed in the contract.
5. Terms related to Earnest Money
Joint Account: The account shared by two individuals is called a joint account
Escrow agreement: A legal agreement that elucidates the terms and conditions applicable to the participants involved is called an escrow agreement.
Warranty Deed: A document that offers the buyer of property the greatest amount of insurance is known as a warranty deed.
For Prelims:
| Earnest Money, Joint Account, Escrow Agreement, Warranty Deed. |
Source: The Indian Express
