Word Watch · Term 17 of 30 · 0:48

Earnest money

ProductionIllustrated Click2CE lesson; AI-assisted production with Sarah narration

In brief

Earnest money is a buyer's good-faith deposit held and disbursed according to the contract and applicable requirements.

Example

A failed closing does not automatically determine who receives the deposit; the contract and lawful release process matter.

TranscriptRead along, or select a timestamp to jump there
  1. Follow the buyer's good-faith deposit.
  2. Earnest money is held and disbursed according to the purchase
  3. contract and applicable requirements.
  4. The deposit moves into proper custody.
  5. At closing it may be credited as the contract provides.
  6. Holding the money does not make it the broker's operating
  7. cash.
  8. Now imagine a transaction that does not close.
  9. Do not jump straight to giving the deposit to either
  10. party.
  11. The contract and lawful release procedures determine the outcome.
  12. Earnest money is also different from the consideration supporting the
  13. bargain.
  14. Quick check:
  15. does a buyer's default automatically authorize immediate payment of the
  16. deposit to the seller?
  17. No.
  18. Follow the contract and lawful disbursement requirements.

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