What Is Earnest Money – Butler County Ohio Realtor Marti McClure-Gibbins

Earnest Money Shows You’re Serious - Tips From Your Butler County Ohio Realtor®

Typically when an offer to purchase a house is made, you, as the buyer, will also pay an “earnest money” deposit. Earnest money is sometimes called "good faith money." This deposit shows the seller that you’re serious about the offer to purchase the property.

The amount of earnest money deposit varies based on the type of property being purchased and local market conditions. As your real estate professional, I’ll help you determine the appropriate amount to pay as an earnest money deposit.

The sales contract will dictate who holds the earnest money. Usually the seller’s real estate agent will collect the earnest money, and the seller's broker will deposit the earnest money in a trust or escrow account until closing. At closing, the earnest money is usually applied to the purchase price. There are some brokers who insist on returning the earnest money to the buyer at closing.

In the event the sale doesn’t close, the sales agreement generally spells out the conditions under which you would forfeit the earnest money. Generally if the seller meets all the terms of the contract, the seller will keep the earnest money. If the seller does not meet the terms of the contract, you, as the buyer, may receive a total or partial refund of the earnest money. Depending on what state you are in and how your purchase contract reads, a court may have to rule on the release of the earnest money if the buyer and seller can not come to an agreement. Make sure you understand the purchase contract.

PARTIAL REPRINT OF ARTICLE FROM MARCH/APRIL 1987 DIVISION OF REAL ESTATE NEWSLETTER

"Handling of Earnest Money Deposits Discussed"

By Margaret J. Ritenour, Superintendent

4) Remitting Earnest Money without a Release Signed by the Parties

Except at the closing of a transaction, a broker should only disburse earnest money from his/her trust account when authorized in writing by the parties to the purchase contract or when ordered by a court of law. Disbursing earnest money without such a signed release or court order has been found to constitute misconduct in violationof Ohio Revised Code Section 4735.18(F).

When earnest money is released without the authorization of the buyer and seller or a court order, a licensee is unilaterally determining which party to the contract is entitled to the earnest money. Such a decision requires either an interpretation of the terms of the contract or a legal determination as to whether a party breached the contract. Clearly, this is not a decision a licensee is qualified to make. To avoid a violation of license law in this area, a licensee should not release earnest money to a party unless the other party to the transaction has provided him/her with a release or authorization to do so. This should be done even in simple cases where it appears clear that the prospective buyer was unable to get the necessary financing. Again, it is highly recommended that this authorization be in the form of a written release so as to avoid later claims that permission was not given.

In the event that one of the parties refuses to sign a release, the earnest money must remain in the broker's trust account until the parties resolve their dispute and instruct the broker of the fact in writing. The only other alternative is for the parties to take their dispute to court. In the event the court orders the licensee to disburse the funds, such a disbursement pursuant to the court's order is required.

To read the entire publication, click OAR Earnest Money June1990.pdf. If you have any legal questions regarding Earnest Money, you should contact a Real Estate Attorney. If you need the names of some Real Estate Attornies in Butler County, Ohio, please feel free to contact me.

If you are thinking about purchasing a home in Butler County, Ohio or you have any questions, please feel free to call me at (513)238-8809 or email me at myrealtor@cinci.rr.com.

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It is illegal, pursuant to the Ohio Fair Housing Law, Division (H) of Section 4112.02 of the Revised Code and the Federal Fair Housing law, 42 U.S.C.A. 3601, to refuse to sell, transfer, assign, rent, lease, sublease or finance housing accommodations, refuse to negotiate for the sale or rental of housing accommodations, or otherwise deny or make unavailable housing accommodations because of race, color, religion, sex, familial status as defined in section 4112.01 of the Revised Code, ancestry, military status as defined in that section, disability as defined in that section, or national origin or to so discriminate in advertising the sale or rental of housing, in the financing of housing, or in the provision of real estate brokerage services.

It is also illegal, for profit, to induce or attempt to induce a person to sell or rent a dwelling by representations regarding the entry into the neighborhood of a person or persons belonging to one of the protected classes.