Earnest Money Deposit's - Are They The Norm Everywhere?

I would most certainly make sure that I documented with my client that I they should consult an attorney before accepting such offer.  I would premise it with the fact that there is no recourse to them for damages if there is not a ratified contract and that without valuable consideration, there is no ratified contract.  You are not only ethically, but legally bound to present all expressed offers (Virginia law only requires you to present written offers - but the COE requires us to present verbal offers, as well).  

And yes, contract law overrules printed contract, in this case.  The laws says that in order to have a contract you must have valuable consideration - so, you have no "printed contract" unless it meets the defination of a "contract".  Even a meeting of the minds, must be done with the context of the law.  Another defense of a contract is it's illegaility.  If it's creation is in violation of the laws, than so is the agreement and the document. 

I think agents get too careless when they start explaining away the laws because it doesn't fit into our understanding of the real world.  I feel very strongly that no single deal is worth going to court over or loosing my license. 

The seller can sell their home, that's not the issue.   The issue is do they have recourse should the buyer default and the answer is no.  The courts are not going to consider the contract binding with valuable consideration.  And when consideration can be as little as $10, why would anyone not produce something?  Heck, put their car in escrow or at the very, very least a promissary note.

Ok, so not to necessarily back-track as much as clarify.  I was re-reading my answers to your questions, and wanted to make sure you understood the premise of my answer.  Escrow can come in many ways.  Valuable consideration can be the mere promises that are agreed upon, as they have some value.  However, I think that without the Seller understanding that the escrow is the promise and that the “value” in the consideration is worth no more than the promise made.  (Which in my opinion and probably many other’s has no value at all).  Again, my premise is that there always must be some valuable consideration, but everyone needs to agree on it’s worth. 

Lou,

Your statement has always been my understanding of the part that EM plays in the process. The valuable consideration is the mutual exchange (hmm, guess if it was an exchange it would have to be mutual!) of promises.  The fact that the EM is is usually held in trust by a third party suggest that not even a constructive exhange (a term I just made up) has occurred.

Admittedly State case law rules in what consitutes a contract but I think that we'd have to thumb through a lot of real estate and business law text books to make the case that EM is a necessary element.

Here is an excerpt from a law dictionary: 

valuable consideration
n. a necessary element of a contract, which confers a benefit on the other party. Valuable consideration can include money, work, performance, assets, a promise or abstaining from an act.

Thus I stand by my comments I made way back on the 1^st.  The Seller defines what he considers is valuable consideration from the purchaser.  Not us.  If you search Arello legal database, you'll find cases that say there MUST be valuable consideration on behalf of the purchaser, but that it can be many different things, so long as value can be mutually agreed upon and proven.

Pettigrew v. Collins in 2000 held that a contract wasn't valid because the Statute of Frauds wasn't met, in that the stated value of the consideration wasn't defined.

As I said before.... Even a promise can hold value if the Seller sees value in the promise.  My point is that it needs to be incorporated in the contract what exactly is being valuated on behalf of the Seller.

Also remember that should this issue go to court, a key element will be what is commonly accepted as value and did the Realtor advise their Sellers well in that regards.

I think the obvious confusion in the comments here are proof of my point...  Valuable consideration is required, but what is of value is an element of the meeting of the minds.  However, what will your client say when the buyer disappears in the night and they ask you what penalty the buyers had for doing so.  What is your answer going to be when there is no EMD or at least a  Promissory note?

Again, I am not an attorney and all I know is Virginia practice, so take it for what it's worth.  But even if I were an attorney, I bet if we got four of them in a room, we'd get "well, it depends...." followed by four different answers.

it's definetly the norm in California and I'm assuming everywhere else that wants to show the seller that your buyer is serious in making a purchase.

Here, my broker likes to see about 2000.00 of earnest money. I remember a few years back when we bought our first home it was about 500.00.

The contract that is used in Northern Virginia stipulates that an earnest money deposit has been made either a check or promissory note.  99.9% of contracts in this area include a check written out to the buyer agents broker or a settlement company, usually in the amount of 1% for lower priced listings and up to 3% on higher priced listings.  If a copy of the check is not included with the offer, I contact the agent to see if their fax machine ate it.

However, I did use the promissory note in one transaction, as the buyers were waiting for funds to be transferred in from an out of state real estate settlement.