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J, Real Estate Pro in Jackson, MI

When must earnest money be deposited? If obtained before offer bottomlined, does it need to be deposited?

Asked by J, Jackson, MI Wed Apr 27, 2011

If we obtain an earnest money check when offer is being negotiated, does it need to be deposited in a certian time frame (48 hours is what I've been taught) . . or can it be held until after the offer is accepted?

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Answers

7
J:

Good Morning!! It needs to be deposited within 48 hours of offer acceptance. Until that time you don't have a valid contract. But check with your Broker, they might have their own rules regarding this issue.

Good Luck,

Karen Paytas, GRI, CMS
Realtor
Real Living Kee Realty
586-709-8465
kpaytas@mirealsource.com
1 vote Thank Flag Link Wed Apr 27, 2011
In NC you can hold that check for a year, but it must be deposited within 3 business days from acceptance. Until there is a contract there is no need to deposit the earnest money. Cash, on the other hand, must be deposited in 3 days no matter -- but I don't accept cash so it would never matter to me. I think it's a common mistake that it must be deposited until there is a contract and that means all signed and sealed. In a short sale the banks signature is needed to make it an accepted contract and not just seller and buyer.
1 vote Thank Flag Link Wed Apr 27, 2011
In Texas, once you have a completely executed contract, you have until 5 PM on the second business day following the executed date of the contract to deposit the Earnest Money.
0 votes Thank Flag Link Thu Jan 23, 2014
An earnest money check must be deposited per one of the following (whichever occurs first):

1. Within 2 banking days of receipt
2. Within 2 banking days of BOTTOM-LINE ACCEPTANCE
3. Whenever is agreed upon in the purchase agreement by all parties.

If you receive a check from a client, you are not supposed to, "hang onto it," regardless of what the contract reads.
0 votes Thank Flag Link Wed Apr 27, 2011
I used to get answers like the one that Brian posted in several markets in which I invest.

Now, my partners and I do things differently. We'll open escrow with a title company (while we're negotiating), deposit some funds (whether or not that deal is under contract), and we'll have the title company to send proof of those funds when it's necessary.
0 votes Thank Flag Link Wed Apr 27, 2011
You are correct in that earnest money funds must be deposited within 48 hours of receipt, but each Brokerage can establish their own policy of "holding funds". An earnest money receipt form should be apart of the disclosures and forms signed at the time of Purchase Offer write-up detailing your Brokerages procedures of earnest money receipt. This will not only protects you as Broker but also clarifys to clients what occurs once earnest money is taken for offer submission.

Good Luck!
Liz
Web Reference: http://www.lizindetroit.com
0 votes Thank Flag Link Wed Apr 27, 2011
I'll give you the Texas answer, so I'm not sure how it applies to MI real estate so take it for what it is worth.

You don't deposit EM until a contract has been signed. If there is no contract, then there is no binding reason to deposit the earnest money. Once the contract has been signed and executed, then it is 48 hours to get it to the title company.

Hope this helps,

It's more than real estate. It's RAYL-Estate!

Brian Rayl, REALTOR®, e-PRO, SFR
Keller Williams Elite Dallas Park Cities
972-949-4222
Brian@Rayl-Estate.com
Web Reference: http://brianrayl.com
0 votes Thank Flag Link Wed Apr 27, 2011
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