Do You Really Have the Earnest Money?

by | Sep 9, 2016 | Legal Tips

When you present a contract offer to another party or their agent, if you do not have physical possession of the earnest money check do not complete Paragrpah 4A of the CCRA contract stating that you do. Too often agents complete this section of the contract when they do not have possession of the earnest money. The client will sign the contract and then inform the agent they do not have the money with them but will send it later. The agent will then submit and negotiate the offer until it is ratified, but fail to get the earnest money. It often works out because the buyer eventually brings the check. Unfortunately, however, on some occasions the buyer never submits the earnest money and then defaults on the contract. Then, when the seller demands the release of the earnest money the agent does not have the money despite their representation in the contract that they do.

The Real Estate Commission has heard this case before in The Matter of Branyon (OIE#2010-49). In this case the agent submitted an offer with $2,500 in earnest money. The agent had a photocopy of the check but failed to get the check from the buyer. After the transaction failed, the seller demanded the money, which the agent did not have. The Commission held Branyon in violation of SC Code §40-57-145(A)(4) (bad faith and dishonesty) and §40-57-145(A)(10) (failure to account for monies).

The commission publicly reprimanded the agent and fined him $500 plus an additional 6 hours of CE training. Because an Order has already been published covering this matter, the next agent to violate the statute could expect a harsher punishment.

If this happens to you, please do not complete Paragraph 4A. Rather,  put the amount of earnest money in paragraph 4B and complete the date the buyer is to deliver you the money. If the money is not delivered the day notated, then inform the seller or seller’s agent that you did not receive the money and that they are not to assume you have it until you notify them otherwise.

Historical Fact- The Fireflies season is over but it was a lot of fun! Maybe we will be lucky and Tim Tebow will get assigned to Columbia next year. Many people may not know that Frank Robinson played for the Columbia Reds in 1954. Robinson started in the MLB in 1954 and tied the rookie record for home runs with 38. He won the NL Rookie of Year Award. He won the triple crown in 1966 and was the first player in MLB history to win the MVP of both leagues. He was the World Series MVP in 1966 and All-Star MVP in 1971.  In 1975 he became the first African American to manage a MLB team. He was elected to the Hall of Fame in 1982.

Photo by Refracted Moments™

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