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Earnest money is the dollar amount that a buyer submits with his/her offer. With the exception of court-ordered sales, no laws govern the size of the deposit or even the need for one. However, the seller and seller's agent will typically want a reasonable deposit to show the buyer's earnest intentions. When earnest money accompanies an offer to buy, the normal procedure is to apply it to the purchase price if the offer is accepted or to return it to the buyer if the offer is rejected. If the offer has been accepted, but subsequently the buyer does not fulfill his obligations, the earnest money can be forfeited to the seller for liquidated damages.
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