Ron Ellison, owner of American Title Company, is not a fan. “Years ago we had a broker in this town who would write their purchase agreements that the earnest money will be deposited upon acceptance of the offer. I’m going to tell you there were times it never got deposited,” he said.
Real Estate attorney Bill Schlecte said that earnest money can be costly for brokers. “I actually litigated a couple cases in which the broker ended up having liability (and) had to cough up the deposit; because the broker either NSF check or failed to make the deposit. We get down to the closing, the buyer says ‘I’m not going to close’ so the seller demands the deposit and it’s not there. One of them was $50,000,” Schlecte warned.
Ellison drove the point home that it is a typical issue, “Honest to God, it is probably, other than tax proration, it is probably the biggest issue we deal with because it is misunderstood.”
You can catch these stories and more on “Thinking Real Estate”, Mondays on WKHM.