An earnest money agreement is a contract that stipulates that the buyer pays the seller a certain amount of money as a deposit before they close the sale. This agreement outlines the terms and expectations governing the relationship between the seller and the buyer.
A sum of $(Amount of Deposit) has been received from the [Buyer.FirstName] [Buyer.LastName] [Buyer.Company] , in the form of check/cash payable under the name of [Seller.FirstName] [Seller.LastName] [Seller.Company] as Earnest Money on (Date of Receiving the Deposit), in part payment of the buying price of the property comprising of (Property Area in Sq. Ft.), located at (Address of the Property).
[Seller.FirstName] [Seller.LastName] is in the process of selling the property as mentioned above, whose total sale price stands at $(Insert Sales Price).
Both parties agree that the Earnest Money indicates good faith, reflecting an acceptable form of the sale price's partial payment.
Considering the mutual covenants and premises, both parties agree to the following terms and conditions mentioned in this agreement.
[Seller.FirstName] [Seller.LastName] will retain the amount of Earnest Money received from [Buyer.FirstName] [Buyer.LastName] , which will be credited to the total sale price payable by the buyer.
Earnest money is a deposit of money, usually cash, that is given to the seller as a guarantee that the buyer will complete the purchase. It is a legal requirement for most transactions in real estate and other industries. In some cases, it may be used as a form of security for the seller until the buyer meets certain conditions.
[Buyer.FirstName] [Buyer.LastName] has made an effort in good faith to ascertain all relevant information about the property from other sources, including speaking with the current owners before entering binding negotiations for the purchase.
No representations were made by anyone, but [Seller.FirstName] [Seller.LastName] , and the seller attests that there are no known defects or problems with the property. The buyer agrees not to enter into any agreements inconsistent with this agreement.
[Seller.FirstName] [Seller.LastName] may require personal guarantees of financial responsibility for the purchase price over (Enter Percentage)% of the purchase price.
Neither the seller nor any third party acting on behalf of the seller or an agent has or has had any liability to pay claims or judgments against the buyer arising from any prior ownership, use, or occupancy of said property unless specifically noted in this agreement.
The buyer, at this moment, releases and discharges said other parties from all such claims and liabilities.
In a real estate transaction, one of the most important things to consider is the buyer’s financial responsibility. If a buyer cannot provide personal guarantees for the purchase price, they will not be able to close on their purchase. However, in some cases, the seller may not demand a personal guarantee from the buyer.
The importance of mentioning the mode of payment in an earnest money agreement is that it provides a level of protection for the parties involved. This ensures that if there are any disputes, it will be easier for one party to prove that they did not receive their final payment. If there is no mention, the court may decide to award damages to one party or another.
[Buyer.FirstName] [Buyer.LastName] at this moment agrees to pay a sum of $(Total Purchase Price of the Property) for the property as outlined above or a cash equivalent.
The buyer agrees to settle or discharge all previous debts and obligations of any nature within the county in which the said property is located. [Buyer.FirstName] [Buyer.LastName] agrees to conduct themselves as a responsible citizen at all times.
The buyer hereby assumes full responsibility for any problem with which they may be charged to avoid this document being used against them in a court of law.
The buyer agrees that they are not protected under this agreement, nor does it in any way relieve the seller of responsibility and liability for any problems with which said buyer may be chargeable.
The buyer is still responsible for all liabilities which may arise from the use of their property. The buyer hereby assumes full accountability for any problems with which they may be chargeable. This document does not limit or waive any claims the seller may have against the buyer.