Come on, Fellow Agents - Let's be Professional About Earnest Money Releases

Real Estate Agent with Re/Max Paradise

short sales, signatureNot all short sales work out, we agents know that. However, it agitates me and the buyer greatly when the listing agent will not make it a priority to get the earnest deposit release signed. I am writing this post in Gulf Shores, while dealing once again with the frustration of a listing agent taking way too much time to get the seller's signature on the earnest deposit release form.

I have lost a client previously over this issue because in the eyes of the client we are holding his earnest deposit, and I should be able to get it back to him. My hands are tied because the rules of the Alabama Real Estate Commission require both the buyer's and seller's signatures. I have been calling and emailing the listing agent with no response. I understand this agent is busy (aren't we all?!), but please let's be professional and get the release signed in a timely manner. Next time, the shoe may be on the other foot, and this agent will be anxiously waiting for a seller's signature.

Rules for releasing an earnest-money deposit are governed by the state licensing regulations. I know that each state has its own set of rules, but I'm sure most, if not all, state's earnest money releases require signatures of the buyer and seller. I'm also aware that agents cannot force anyone to sign a document, and if there is a true dispute over whether the earnest money deposit is owed to the buyer, it is out of our hands and the buyer or seller may initiate a lawsuit or civil action. By the way, there is a very good article written by Charles Sowell, General Counsel for the Alabama Real Estate Commission, on the subject of earnest money disputes posted online.

Short sales can be "long" in time and patience, and I urge my follow agents not to add stress to the situation by being lax in getting required signatures. The best real estate rule of all is the Golden Rule - - let's try to follow it!

OK, I'm done venting my frustration today and I appreciate you listening! Time to move on and deliver the best service to my clients in Gulf Shores and Orange Beach.Ā  Lance Steffek: 251-981-2225.


Re-Blogged 1 time:

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  1. Charita Cadenhead 09/15/2011 04:51 AM
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Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

I've had to threaten agents with contacting the Board of REALTORS in my county and lodging a formal complaint before the money was released!

Sep 15, 2011 05:00 AM #6
Tish Lloyd
BlueCoast Realty Corporation - Wilmington, NC
Broker - Wilmington NC and Surrounding Beaches

I'm so glad Charita re-blogged this!  As long as it's not a question of legalities and simply a question of signatures, you're right -- get it signed and lets all move on!

Sep 15, 2011 05:38 AM #7
Yvette Chisholm
Long & Foster Real Estate, Inc. - Rockville, MD
Associate Broker - Rockville, MD 301-758-9500

This is a great discussion.  It is important not only to get the paperwork done, but done right.   When you are dealing in the short sale or foreclosure market, it could be hard to get the money back.

Sep 15, 2011 10:46 AM #8
Eric Michael
Remerica Integrity, RealtorsĀ®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

I agree. If the deal is not going to move forward, get the release signed as soon as possible to everyone can move on.

Sep 15, 2011 11:04 AM #10
Ken Tracy
Coldwell Banker Residential - Naperville, IL
Helping clients buy and sell since 2005

Hi Lance.  I have seen it from the other side...

As a listing agent, I can't make my sellers sign the agreement.  I would love them too, but some don't want to.  And we do represent them...

I fully understand the way you feel, however...


Sep 15, 2011 11:44 AM #11
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY


If that happened in New York we'd have one hell of a lawsuit. Of course, lawyers hold deposits here, not brokers. 

Sep 15, 2011 11:54 AM #12
Karen O'Donnell
Keller Williams Realty Greater Cleveland Northeast - Mayfield Heights, OH

Very frustrating. In Ohio, a Broker can only release earnest money in one of two ways. Either with a mutual release signed by both the buyer and seller, or by a court order. Our hands are tied. Our purchase agreements state as such, and I try to emphasize this portion of the PA with both my buyers and my sellers.

I hope by the time you read this you will have your signed release and the check is in the mail to your buyers!


Sep 15, 2011 11:59 AM #13
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

In my area, the EMD isn't even deposited until the bank approves the short sale. No release necessary if the short sale doesn't work out.

Sep 15, 2011 01:28 PM #14
Lance Steffek
Re/Max Paradise - Orange Beach, AL

I appreciate everyone's comments.  This case for me was where the seller's lender did not approve the buyer's offer.  It is very clear cut in that case, the listing agent should make it a priority to get the release signed ASAP.

Sep 15, 2011 01:49 PM #15
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker


Most of our deals go through, only a handful of short sales in the entire Province of Ontario.

But, if the money is to go back, make it a priority and get it done. Everyone will appreciate that.


Sep 15, 2011 02:29 PM #16
John Juarez
The Medford Real Estate Team - Fremont, CA

In California, buyer and seller must agree to a release of the deposit. HOWEVER, “A Buyer or Seller may be subject to a civil penalty of up to $1,000 for refusal to sign such instructions if no good faith dispute exists as to who is entitled to the deposited funds.” This is a quote from our standard purchase contract and it is part of the California Civil Code.

If there is a dispute of the legitimacy of the cancellation, let’s settle the dispute. If there is no dispute, hanging onto the buyer’s deposit money is an action of a small person and agents should discourage such activity by their clients.

Sep 15, 2011 04:21 PM #18
Jon Quist
Tucson's BUYERS ONLY Realtor since 1996

In Arizona the EM release is unilateral. No contract, no deal. Otherwise I would imagine all the sellers lining up to get their hands on it.

We don't open escrow without a contract signed by the sellers BANK, with complete approval accomplished. Until everything is completely signed, it is an offer, not a contract.

Sep 15, 2011 07:56 PM #19
Beverly Jo Cole
Southern Cross Real Estate, Inc. - Fort Lauderdale, FL

I've been on both sides of this situation as well Lance. And yes, it is darned frustrating when personal grudges get in the way of the listing agent and/or the seller getting the release signed in a timely manner. If the contract allows for the buyer to walk, whether it be for inspection results, appraisal, loan approval, short sale approval, etc., then the escrow release MUST be signed! If the seller wants to try and hold onto money that isn't theirs to take, then they should put a non-refundable escrow clause in the contract. (Let's see how many buyers would line up for that one).

I always tell my sellers that we have multiple hurdles to jump in any contract before it's a DONE DEAL....and everything listed above is what I discuss. Generally, a good agent will explain all of this to a seller and get the release signed. It seems that you are dealing with an agent who may have a difficult seller and possibly is fanning the flames of the seller's frustrations over a fallen deal.

Good luck and hope you get that release soon!

Sep 15, 2011 09:12 PM #20
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

I've had similar issues here in Florida, Lance.   We do have a procedure where we can notify the listing broker that we will release the money after xxxx days if they don't respond otherwise, should they not respond to our original requests.

Sep 16, 2011 12:01 AM #21
Mike Cooper, GRI
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Lance, unfortunately it's not just short sales.  I had one last year that went from October of the year before to the following August.  Nearly a year.  I had to squeeze the guy's broker to get the money back.  Oy!

Sep 16, 2011 12:12 AM #22
John Benson
RE/MAX Home Experts - Philadelphia, PA
Broker/Owner - Philadelphia Real Estate

Lance, this is not always a listing agent's fault. Many times the LA has difficulty communicating with the client as the seller may be upset the deal has fallen apart. As a buyer's agent, we must advise this can be an issue and deposit money can be held for an extended period of time until mutual consent or a court order (in PA, it became such a problem that the commission created a law that states if a deposit is held for more than 1 year without court action or continuous response from the seller, the buyer gets the money back by requesting it in writing - I summarized this). As a listing agent, we also must advise that deals can fall through and advise the seller obtain an attorney should they feel entitled to any deposit money. In a short sale, a buyer should not put a large deposit for the reason that sellers may not be very motivated to do much of anything during the process (let alone sign back deposit money). I will say this - it is aggravating as well that so many buyers have an "easy out" and bail on deals. The fact that there is a contract means very little anymore, so i can understand both sides to this. A buyer can alsways file legal action against the property and hold up any future sale, which should deter other buyers and title companies from insuring it.

Sep 16, 2011 01:35 AM #23
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Lance, check the laws in your state for holding funds in escrow. There may be other options for getting the money back if the seller won't sign.

Sep 16, 2011 02:26 AM #24
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Lance I wrote a similar post on this topic of release of earnest money and WHILE it is the buyer and seller who have signatures unfortunately some agents steer their clients the wrong way in holding back the money. EVERYONE should just follow the letter of the contract. Unfortunately this does not happen always. A split is a compromise even though it is truly unfair.

Sep 16, 2011 04:43 AM #25
Mike and Adie Realtors
(909) 476-9600 - Moreno Valley, CA
Realty Masters & Associates

Hello Lance,

I see it from both side. The Listing side and the Buyers side. As a listing agent we try our darnedest to sell the property, but if it doesn't sell we move forward. From the Buyers end. If the deal isn't going to move forward. Seller...Sign the EMD and move forward.


Sep 16, 2011 06:03 AM #26
Paul Davidson

Great article. Thanks for the info, you made it easy to understand. BTW, just in case anyone needs to fill out a release of earnest money form, I found a blank forms in this site PDFfiller. This site also has several related forms that you might find useful. Here is a blank release of earnest money form that I was able to use and fill out

Feb 15, 2015 04:22 AM #27
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