When it comes to the world of real estate transactions, an earnest money agreement is a crucial step in ensuring that both parties involved are serious about executing the deal. Essentially, an earnest money agreement is a legal document that outlines a buyer`s willingness to purchase a property and the seller`s willingness to sell it – all for a small deposit of funds, known as earnest money.
If you`re in the market for a new piece of property, you may be wondering what a typical earnest money agreement looks like. Luckily, we`ve compiled a sample agreement to give you a better idea of what to expect.
Earnest Money Agreement Sample
This earnest money agreement (the « Agreement ») is made on [Date] by and between [Buyer] (the « Buyer »), and [Seller] (the « Seller »). The Buyer and Seller agree as follows:
1. Purchase and Sale. The Buyer agrees to purchase, and the Seller agrees to sell, the following described property (the « Property »):
[Insert description of property, including any notable features such as square footage, number of bedrooms, etc.]
2. Purchase Price. The purchase price for the Property is $[Insert purchase price]. The Buyer agrees to pay this amount to the Seller at the time of closing.
3. Earnest Money. To show the Buyer`s good faith in completing the transaction, the Buyer agrees to pay earnest money in the amount of $[Insert earnest money amount] (the « Earnest Money ») to [Insert name of third-party holding the funds] (the « Escrow Agent ») within [Insert number of days] days of the execution of this Agreement.
4. Disbursement of Earnest Money. If the transaction is not completed due to a default by the Seller or an inability to obtain financing by the Buyer, the Earnest Money will be returned to the Buyer. If the Buyer defaults on the transaction, the Earnest Money will be retained by the Seller. If the transaction falls through due to a dispute between the parties, the Earnest Money will be retained by the Escrow Agent until a resolution is reached.
5. Conditions. This Agreement is subject to the following conditions:
[Insert any conditions that must be met before the transaction can be completed, such as an inspection of the Property or obtaining financing.]
6. Closing Date. The closing date for the transaction shall be on or before [Insert closing date].
7. Attorneys` Fees. If any legal action is taken to enforce or interpret this Agreement, the prevailing party shall be entitled to recover reasonable attorneys` fees and costs incurred in connection with such action.
8. Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral.
9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of [Insert state].
10. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall be deemed an original.
In witness whereof, the parties have executed this Agreement on the date first above written.
Buyer: [Insert buyer`s name]
Seller: [Insert seller`s name]
Escrow Agent: [Insert name of third-party holding the funds]
In conclusion, an earnest money agreement is an important part of the real estate transaction process. By providing a sample agreement, we hope to have given you a better idea of what to expect when negotiating your own earnest money agreement. Remember, it`s always important to seek legal advice and guidance before entering into any legally binding agreement.