Earnest Money Deposit

[Account Closed]

Hi everyone. Happy new years to all.

I have a concern about earnest money. I initially intended on double closing on a property however my B-C buyer backed out of the deal. I disclosed that earnest money was nonrefundable. The problem came about when my closing manager said that I need to talk to my broker to put a claim on the deposit because I dont own the property yet. and then suggested I spoke with an attorney. 

My question is wouldnt I automatically be entitled for the deposit? and why should I have to speak with my broker?

[Ben Leybovich]

1.  Legally, the Purchase and Sale Contract constitutes transfer of money.  Talk to an attorney and they'll tell you that a signed offer with a purchase price is valid without earnest money.

2. The earnest money is what the brokers want and they sell it to the public as necessary.  Can't blame them - they are protecting their ***.  This is why you are being told to speak to the broker...

3. There is a bigger problem here.  If you haven't noticed, in real estate investing all you have is your word.  If you signed the contract - perform.  if you can't perform, don't sign the contract.  If you offered earnest money - leave it be.  Your reputation is more important.  You go to the seller and admit that you couldn't perform and never intended to buy.  You know you f'd up and you will let them keep the earnest money.  This is the honorable and right thing to do...