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The Buyers Breached the Contract - What happens to the earnest money?
The Buyers Breached the Contract - Does that mean I get to keep their earnest money?


There can be a wide variety of answers to this question. So today we will use this scenario:

We have a buyer who breaches the contract. The sellers do not want to sue for performance. Buyers agree to sign for the release of earnest money which states 50% to seller and 50% to the listing broker. Seller is wondering why they did not get to keep all or at least half of the earnest money.

Here's what the Texas Association of Realtors Residential Real Estate Listing Agreement, Exclusive Right to Sell listing contract says in paragraph 5. D. (1)

So, if the contract were breached before closing occurs, AND... IF their broker is willing to let them have his/her part of the commission, AND there are no fees that need to be paid for such as survey, inspection, title policies, etc.... THEN the seller could, in theory, keep the entire amount. I have NEVER seen this happen.

Obviously, this is not the seller's fault OR the agent's fault. The agent earned the commission, so typically they end up splitting ... more

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