Home Buying in Charleston>Question Details

Bill Pelosi, Home Buyer in Charleston County, SC

What happens to a contract when the buyer makes an offer on a home and does not hand over earnest money?

Asked by Bill Pelosi, Charleston County, SC Sat Feb 16, 2013

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Hey Bill,

I would say that if the earnest money is not deposited as stated in the contract and agreed upon then the buyer becomes in Default. At this point the seller can cancel the contract if they want to. If the home owner wants to continue with the buyers they can and most likely will ask for the earnest money to be deposited, who knows maybe the buyers forgot or were first time home buyers whos agent was not keeping them properly informed. At this point their agent or attorney can create an addendum putting in an extension to deposit the money to keep the deal together. I hope that helps!

Best,

Brian
5 votes Thank Flag Link Sat Feb 16, 2013
If the buyer doesn't provide the earnest money deposit in a timely fashion, then the buyer is in breach of the contract if indeed the seller agreed to accept the buyers offer
Web Reference: http://dmvmetrohomes.com
1 vote Thank Flag Link Sat Feb 16, 2013
If the contract is ratified, and the escrow/earnest money is part of the contract, then the Buyer is obligated to perform by providing the earnest money to the escrow agent. Consult a real estate attorney for legal accuracy.
0 votes Thank Flag Link Mon Feb 18, 2013
Good afternoon, Bill!

As many who have replied prior to my response have said, if the Earnest Money , also known as consideration, has not been deposited then the contract is not not a ratified contract and is therefore not binding on either party. You are therefore able to accept other offers on your property.

Have a fantastic week and good luck in the sale of your home!

Best regards,

Cheryll

Cheryll Woods-Flowers, Coldwell Banker United
cflowers@woodsflowers.com
843-442-2219
0 votes Thank Flag Link Mon Feb 18, 2013
The answer depends on the way the contract is written. The terms of earnest money are determined on the contract and buyer and seller must agree to terms for there to be a contract. If page 1 of the contract reads deposit of value of earnest money be (ie) $1000.00 this money needs to be presented with offer. Should agreement specify other and have that other specified in section 29 contingencies this could be agreed buy both parties and there could be a contract. I need to know what the contract reads as it relates to earnest money, before answering question.
0 votes Thank Flag Link Mon Feb 18, 2013
When you the buyer sign it's an offer, when the Seller signs (without making any changes to the offer) you've got a contract. If you have a contract that stipulates that the buyer turn over an earnest money deposit upon receipt of the signed contract and they don't they have breached the contract and the Seller is then under no obligation to the buyer. If you simply have an offer (in other words the Seller hasn't yet signed off) then there's no reason to turn over earnest money.

I hope you're working with an experienced buyer broker, and if you are you should be speaking with them. If you don't want to buy the property or are having second thoughts, do the right thing and inform the seller and/or your agent. If you don't have an agent check out the link below on how to find a great agent regardless of where you're located.
0 votes Thank Flag Link Sun Feb 17, 2013
Bill - your question sounds like only an offer has been submitted and there is no binding, ratified contract. In this electronic age, it is customary that a copy of the earnest money check be submitted with the offer. Once the parties have a binding contract, the escrow agent named in the contract is required by law to deposit the check within 2 business days (most local brokerages do not accept cash earnest money deposits as a policy). If the escrow agent doesn't have the check then it can't be deposited and this can be a problem. You should consult with your attorney if this is your situation. For reference, the seller does have the authority to require the earnest money check accompany any written offers.
Jim Bobo, Jr. Accredited Buyer Representative, Resort and Second Property Specialist
jim@jimboborealestate.com
Call or text (843) 442-7275
SC Land and Homes LLC
PO Box 1182
Johns Island, SC 29457-1182
Web Reference: http://sclandandhomes.com
0 votes Thank Flag Link Sun Feb 17, 2013
What id I have an offer with earnest money to be deposited by 5 pm at end of Due Diligence ( Friday)time and now on Thursday , 6 days beyond due date ( even with many attempts by my selling agent it is still not deposited? We know we can cancel offer due to breach but are we entitled the earnest money since buyer breached?
Flag Thu May 14, 2015
If earnest money is not deposited into specified holding account then you do not have an executable contract. One of the required components of an executable contract is legal tender.
0 votes Thank Flag Link Sat Feb 16, 2013
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