Earnest Money Agreement

This Earnest Money Agreement is a form of security deposit made by the purchaser of

real property to show that the he or she is serious about completing the transaction.

When the transaction is finalized, the funds are put toward the purchase price. If the

contract is terminated for any reason other than the purchaser's breach, the deposit is

returned to the purchaser. This agreement contains numerous standard clauses that

are commonly included in these types of agreements, and it may be customized to fit

the specific needs of the contracting parties. This document should be used by a

purchaser and seller of real property when entering into a purchase agreement.

EARNEST MONEY AGREEMENT

This Earnest Money Agreement (hereinafter the “EM Agreement”) is made on this ____ day of

____________________ of 20______ by and between

_______________________________________ [Seller name/address] (hereinafter the “Seller”)

and _______________________________________ [Buyer name/address] (hereinafter the

“Buyer”).

RECITALS



WHEREAS, Seller and Buyer executed an agreement on __________, ______ whereby Seller

agreed to sell and Buyer agreed to buy the property described in the attached Exhibit “A”

[Comment: user should set forth a description of the property in a separate document and

include it as an exhibit to this Agreement] (hereinafter the “Property”) (hereinafter the “Sale

Agreement”); and



WHEREAS, the Sale Agreement states that a total sum of ___________________ dollars

($_________) has been or will be deposited with Seller, pending the closing of the purchase and

sale.



THEREFORE, in consideration of the premises and the mutual covenants contained herein, the

parties hereto agree as follows.



TERMS



I. EARNEST MONEY



At the execution of this EM Agreement, Buyer is to have deposited with Seller the total sum of

___________________________ dollars ($__________) (hereinafter the “Earnest Money”) as

Earnest Money and partial payment of the consideration set forth in the Sale Agreement. The

Earnest Money shall be deposited as of the ____ day of ____________________ of 20______.



Seller shall invest the Earnest Money in either certificates of deposit issued by commercial banks

insured by the federal government, United States Treasury Bonds, or “money market” accounts.



II. CLOSING



If and when the transaction agreed upon in the Sale Agreement is consummated, Seller shall

retain the Earnest Money. Buyer shall be given credit towards the total purchase price set forth

in the Sale Agreement for the sum of the Earnest Money retained by Seller. All income earned

on the Earnest Money during the escrow period shall be retained by Buyer.



III. FAILURE TO CLOSE



If the Sale Agreement 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









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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 no refund.]



If the Sale Agreement is breached by Buyer and the sale and purchase fail to close, the Earnest

Money shall be retained by Seller as liquidated damages for Buyer’s breach of the Sale

Agreement. All income earned on the Earnest Money during the escrow period shall be retained

by Buyer.



IV. INSTRUCTIONS



Seller shall 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 Sale

Agreement.



If a conflict between Buyer and Seller arises, Seller shall deposit the Earnest Money, plus all

income earned during the escrow period, with a court of competent jurisdiction located in the

State of ____________________, County of ______________ [Comment: insert county, state].





V. NOTICES



Any further correspondence, including documents, requests, notices and other instructions, shall

be made in writing and delivered personally or mailed by certified mail to the following

addresses:



To Seller: _______________________________________

[Seller name/address]

To Buyer: _______________________________________

[Buyer name/address]



VI. ARBITRATION



Any dispute or claim related to or arising from this EM Agreement, its performance, breach,

interpretation, val