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Returning Earnest Money Deposits Held in Escrow

By Julie Booth

Services for Real Estate Pros with Fidelity National Title 540-EA-52017

August 01, 2014 09:46 AM

Returning Earnest Money Deposits Held In Escrow

When escrow is holding the earnest money deposit from the buyer, we hold it as a neutral third party.

Please understand that escrow cannot release the funds without both buyers and sellers signing an agreement that the funds can be released.

Every once in a while I receive a call from an agent that feels I should return the earnest money deposit to the buyers based on the terms of the purchase agreement, without further documentation.

Please understand that it is a requirement of the Department of Financial Institutions, that all parties provide written instructions before disbursements can be made.

Once the buyer has sent in a written request for the funds, this can go directly to the seller for their review and approval.

Thanks for reading!

Julie

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Zorik Dadoyan

Keller Williams Realty - Sherman Oaks, CA

Residential and Commercial Real Estate

Good line. New agents must understand this before giving false info to the buyers.

Nov 03, 2010 01:19 PM

Sybil Campbell

Fernandina Beach, FL

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

I have a case now on file with our RE Board regarding an EMD depoist on a deal. Should be interesting to see how the board rules.

Nov 03, 2010 01:20 PM

Sybil Campbell

Fernandina Beach, FL

Connie Goodrich

Keller Williams Realty - McKinney, TX

CRS ABR (McKinney Realtor)Texas

In Texas, we have several documents for the release of Earnest Money. The title companies hold the earnest money which is a welcome to have a thrid party company like you to hold. The funds are released if the contract has no stipulations for retention and the termination is during the option period (documented). Only one way signature is required with that senario. Anytime afterwards both buyer, seller and agents need to sign off. Still can get tricky and yes, many agents do try the title officer in seeing if they can get it released. Those agents clearly do not understand how contracts work and duties of the title company.

Nov 03, 2010 01:22 PM

Sybil Campbell

Fernandina Beach, FL

Larry Bergstrom

Crescent Realty, Inc. Spanaway, WA. - Spanaway, WA

CNE, CRS, GRI

Julie, generally speaking, when you tell the agents involved about our interpleader process, they usually smarten up.

Nov 03, 2010 01:26 PM

Sybil Campbell

Fernandina Beach, FL

Sarah Rummage

Benchmark Realty LLC, Nashville TN 615.516.5233 - Nashville, TN

Love Being Realtor® in the Nashville TN Area!

I am GLAD to have the closing attorney or the other broker hold the earnest money instead of my office.

You are right, Larry, interpleader is no fun!

Sarah

Nov 03, 2010 02:09 PM

Sybil Campbell

Fernandina Beach, FL

Julie Booth

Fidelity National Title - Federal Way, WA

Keeping the parties informed of the escrow process

Thanks for the comments, everyone!

Zorik: These are not necessarily new agents that try to pressure escrow for the cash. Last week it was an agent that has been in the business for 23 years. Her explanation was that "an attorney drew the purchase agreement".

Cindy: Your board of realtors makes these determinations in Virginia? Interesting. Here in Washington it is a judge that determines who gets the funds in a dispute, after the funds have been interpled.

Connie: Thats interesting too! I love Active Rain, I learn so much by talking with people in other states. "No stipulation for retention" is the key there? That is foreign here in Washington.

Larry (fellow Washingtonian!): Yes, education is key.

Sarah: I like it when the selling brokers hold the earnest money, that way the agent or their broker can determine who gets the funds if the transaction doesn't close and I don't have to dissappoint an agent by telling them that even though they have worked for months to get a deal closed, there is still more paper work to do and no check at the end.

Nov 04, 2010 04:18 AM

Sandra White

John L Scott Real Estate - Port Townsend, WA

Experienced Residential Resale Broker

More and more people in my state are not even taking earnest money any more. It is not necessary to make a legal contract, and just a pain when the deal goes south. Most sellers still want it, but not all if you explain how easy it is for buyers to take it back.

Nov 06, 2010 07:25 AM

Sybil Campbell

Fernandina Beach, FL

Julie Booth

Fidelity National Title - Federal Way, WA

Keeping the parties informed of the escrow process

Hi Sandra, We are in the same state, yet I haven't seen that yet. This is an ever changing business!

Nov 06, 2010 09:12 AM

Sandra White

John L Scott Real Estate - Port Townsend, WA

Experienced Residential Resale Broker

You are right, we are in the same state. We have had many CE classes where they say earnest money is not a requirement of a valid contract, and Seller rarely ever gets to keep it so don't bother. I did have a seller who was able to keep $7000 with no questions asked when a Buyer at the last min. (literally) wanted to back out. They asked to have it back and he just said NO. You are right it is tough to keep up. I hope we can exchange referrals in the future.

Nov 10, 2010 04:57 AM

1~Judi Barrett

Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK

BS Ed, Integrity Real Estate Services -IDABEL OK

We have to have agreement in writing to return the earnest funds unless it's during and due to the inspection period or a contingency that already has agreement between the parties for that situation when they signed their contract. If they do not agree, there are some steps that are to be taken as options for returning it. One involving certified letters. If that doesn't resolve it, funds can be turned over to interpleader court.

Aug 01, 2014 10:34 AM