Question on earnest money

Asked by Paige, 17356 Sat Dec 1, 2007

I gave a seller a check for $500 as a good faith payment and they cashed it 3 days later; settlement isn't for another 2 weeks. Is this legal? This is a for sale by owner home in York, PA.

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10
Donna Saylor…, , Malvern, PA
Sat Dec 8, 2007
It is common practice to deposit the good faith check within 3 days of receiving it. Typically, it is held in an escrow account by a third party and a check made out to the title company is handed over at settlement. If the money is being held in the sellers account already that step will not be neccesary. What you do want, in order to avoid any confusion, is a receipt specifically stateing the amount of the deposit, who paid it, who received it, and when. Also, the receipt should state the property the deposit is securing and be signed by both parties. It's really a small detail, but should there be any problem it provides a paper trail more concise than a cancelled check.
2 votes
Deborah Madey, Agent, Brick, NJ
Sat Dec 1, 2007
The terms of your contract dictate. In most cases, yes, earnest money is cashed prior to closing. It is also typical for a third party to cash and hold any funds prior to closing. That might be a real estate broker, title company, escrow company, or attorney. If you are buying a property directly from the owner, and you gave the deposit ck to this seller, he/she may have been entitled to cash it. Check the contract terms.
2 votes
Horlow , , 19440
Sat Dec 1, 2007
Well, They ( seller) want to make sure it's a good check if it's not a cashiers check and in case you change your mind last minute they get to keep the money . Read your agreement ( deposit money) and the default consequences.
1 vote
Nina Chen La…, Agent, Dunn Loring, VA
Sat Dec 1, 2007
It really depends upon the agreement that you signed. What did your contract state how the deposit would be held?
1 vote
Carolyn Boyle, Agent, Hanover, PA
Thu Apr 3, 2008
Paige-That is the usual way to handle the good faith payment. If you would want to be sure to have a 'paper trail' , have the seller show the money deposited and ask them to give a copy of the statement to the title company or attorney that is handling your settlement.
Web Reference:  http://www.carolynboyle.com
0 votes
Mark Palace, Agent, Satellite Beach, FL
Sun Dec 2, 2007
In my opinion, this is a legal transaction. Read through your contract for sale and purchase, for it should specify exactly who is to hold the binder deposit (i.e. earnest money deposit). Really, to protect yourself, you should truly hire a Realtor who would have your best interests in mind and take care of the entire transaction for you. We can help you with your question. Please contact us directly.

Best,
Mark Palace, CEO/Founder
Palace Properties International, Inc.
http://www.PalacePropertiesOnline.com
321.773.5611
321.704.9305
0 votes
Mike Fink, , Harrison City, PA
Sun Dec 2, 2007
You are a very trusting person. You may have just given $500.00 to a house sitter. When you are not working with a real estate professional there are many risks. I hope you knocked 7% right off the top and your seller didn't jack his number up 7% in anticipation of you doing so.

Mike Fink
Northwood Realty
Web Reference:  http://www.northwood.com
0 votes
Edmund Choi, Agent, Paoli, PA
Sun Dec 2, 2007
Normal procedure. Congrats on securing a property for only $500; awesome downside if you default.
0 votes
Jeanie Hohol…, Agent, Maple Grove, MN
Sun Dec 2, 2007
You are fortunate that the listing agent and the seller accepted a check for $500. It's too easy to walk away from a sale when all you are offering is $500 to secure the transaction. Lucky you. Please make sure that you follow through with your loan officer and I wish all of you the best of luck with the closing.

Jeanie
0 votes
Lorie Gould, Agent, Duluth, GA
Sat Dec 1, 2007
Paige... this depends on how your contract is written. Typically, earnest money is required to be deposited within 5 days from the binding agreement... that is how our real estate contracts in Georgia are written.

Read your contract for provisions regarding the earnest money.
0 votes
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