As you may have noticed, many real estate agencies have moved away from holding earnest money. Most of these agencies request the closing attorney hold the earnest money for the transaction. I have spoken to several closing attorneys and most are experiencing similar but consistent issues with holding earnest money. Here are the top three issues:
- Many buyers mail checks to the law firm without any identification of the buyer, agent or property address. The closing attorney has no way of knowing what file the check applies to or what agent is involved in the transaction.
- Earnest money checks are being delivered without the contract. Several weeks pass without the contract being delivered delaying the ordering of the title work.
- Contracts are being sent to the closing attorney but the buyer fails to bring the earnest money check.
To avoid issues with earnest money, here are some important tips:
When the closing attorney is holding earnest money, please instruct the buyer to provide clear and legible information identifying the property address, the buyer and the real estate agent. Don’t just tell the buyer to take the earnest money to the closing attorney.
Secondly, please make sure that the contract and earnest money are both delivered to the closing attorney closely in time.
If your client follows these simple tips it will help eliminate issues of returning earnest money if the closing is terminated as well as eliminate delays in ordering title work.
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