Earnest Money Agreement

It is important that both the Buyer and Seller understand what the broker's legal obligations are with respect to an earnest money deposit. Many form purchase agreements recite only that the broker has received a specified sum of money as an earnest money deposit, and then when the transaction fails, the parties are surprised that the broker cannot simply return the deposit to the Buyer or turn it over to the Seller. It is recommended that there be included in the purchase agreement a provision that specifies that if the parties are unable to agree as to the proper party to receive the earnest money deposit, the broker must keep the deposit in his account until a final court order specifies which party is to receive the deposit.