This is an agreement between two parties that have already entered into a purchase-
sale agreement for certain real estate. This particular agreement is a side agreement
whereby the buyer provides earnest money, or a deposit, to demonstrate their
willingness to enter into the transaction. The seller holds the earnest money in an
escrow account until closing and will then apply the earnest money to the balance of the
real estate transaction. The original purchase-sale agreement between the parties
should be attached to this agreement under â€œExhibit A.â€ This agreement can be used by
individuals or entities that have just entered into a real estate transaction but want to
provide more security by depositing earnest money.
REAL ESTATE EARNEST MONEY AGREEMENT
This Agreement made on this ____ day of ____________________, 20______
[Instruction: Insert date.] between Seller and Buyer, as such terms are defined herein
(hereinafter the â€œAgreementâ€)
[Instruction: Insert Sellerâ€™s name and address.]
(hereinafter the "Seller"),
[Instruction: Insert Buyerâ€™s name and address.]
(hereinafter the "Buyer"),
WHEREAS, Seller and Buyer have entered into and executed that certain contract dated
as of the ____ day of ____________________, 20______ [Instruction: Insert contract
date.], which shall hereinafter be deemed incorporated by reference (hereinafter the
"Contract"), whereby Seller has agreed to sell and Buyer has agreed to buy the certain
real property described in the attached Exhibit A, which shall be deemed a part hereof
and incorporated by reference [Comment: User should set forth a description of the
property in a separate document and include it as an exhibit to this Agreement.];
WHEREAS, the Contract states that a total sum of ___________________________
United States Dollars ($_______________) [Instruction: Insert amount of contract
deposit.] has been or will be deposited with the Seller [Comment: Revise as necessary,
if any other party other than Seller will hold the money.], pending the closing of the
purchase and sale pursuant to the terms of the Contract.
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows.
I. EARNEST MONEY
Simultaneously with the execution of this Agreement and as set forth in the
Contract, Buyer will deposit with Seller the total sum of __________________________
United States Dollars ($_______________) [Instruction: Insert amount to be
deposited.] (hereinafter the "Earnest Money") as Earnest Money and a partial payment of
the consideration under the Contract.
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Seller (â€œEscroweeâ€) shall hold the Earnest Money in escrow in a segregated bank account
until Closing or sooner termination of this Agreement and shall pay over or apply the
Earnest Money in accordance with the terms of this paragraph. Seller shall hold the
Earnest Money in a(n) non/interest-bearing [Instruction: Delete inapplicable.] account
for the benefit of the parties. If interest is held for the benefit of the parties, it shall be
paid to the party entitled to the Earnest Money and the party receiving the interest shall
pay any income taxes thereon. If interest is not held for the benefit of the parties, the
Earnest Money shall be placed in an account as otherwise permitted or required by law.
At Closing, the Earnest Money shall be paid to Seller. Seller acknowledges receipt of the
Earnest Money by check subject to collection and Seller's agreement to the provisions of
this paragraph by signing in the place indicated on the signature page of this contract.
[Comment: If Earnest Money is to be held by an attorney or other party, other than
Seller, additional language may be required to preserve the additional rights of such
If and when the purchase agreed upon in the Contract is consummated, Seller
shall retain the Earnest Money. Buyer shall be given credit towards the total purchase
price as agreed upon in the Contract for the sum of the Earnest Money retained by Seller.
III. FAILURE TO CLOSE
If the Contract is rescinded or terminated for any reason other than breach by
Buyer, the Earnest Money, in addition to all income earned during the escrow period will
be returned to Buyer. [Comment: Whether to refund the Earnest Money, here, is up
to the discretion of the user. User can alter this language to state that there will be
If the Contract is breached by Buyer and the sale and purchase fail to close as a
result of such breach, the Earnest Money shall be retained by Seller and considered
liquidated damages for Buyerâ€™s breach of the Contract. All income earned on the Earnest
Money during the escrow period shall be retained by Buyer.
Seller will not return or otherwise distribute the Earnest Money or any income
earned on the Earnest Money during the escrow period without the written consent of
both parties to the Agreement.
If a conflict between Buyer and Seller occurs, Seller shall deposit the Earnest
Money, plus all income earned during the escrow period, with a court of competent
jurisdiction located in __________________________________ [Comment: Insert city,
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county, state]. The Parties shall then bring an action in interpleader. Upon such deposit,
Seller shall have no further liability with respect to such Earnest Money, except as
otherwise set forth herein or as required by law.
Any further correspondence, including documents, requests, notices and other
instructions or notice, shall be in writing and delivered personally or mailed by certified
mail to the foll