Will my Deposit Money check be cashed? (Earnest Money/Real Estate)

"Will my Deposit Money check be cashed?" (Earnest Money/Real Estate)

    Just about every Buyer client I represent asks me if their Deposit Money check will be cashed. The answer is yes, but there's more to it.

    First, what is "Earnest Money" or "Deposit Money" in a residential real estate transaction? It's the money held by the Listing Brokerage (or Listing COMPANY) while the property is Under Agreement (a meeting of the minds between a Buyer and a Seller regarding the terms of the sale), but not yet SOLD. According to the law in Pennsylvania as I understand it (I'm a real estate Broker, not a lawyer), the Listing Brokerage (the company that listed the house for sale) has only one day after the deal is fully executed (all parties in agreement on all terms) in which to cash the Deposit check into their Escrow account. An Escrow account is merely a "holding place" for the money until the day of settlement when all the final paperwork is signed. At that time the Deposit money will go into the Buyer's pool of funds.

    The Deposit money can't co-mingle with other funds and doesn't typically earn enterest for anyone inolved. It's kind of like burying the cash in a coffee can in your back yard and digging it up a few weeks later. It's merely there to secure the transaction. In most cases, the Seller may have the right to keep the Deposit money in the event that the Buyer Defaults (also known as  breaching the contract). If the Buyer complies with all the terms they've agreed upon in the Agreement Of Sale contract, they never lose a dime of it.

Have a question for a Pennsylvania licensed real estate Broker? Feel free to call our office any time. (even evenings or weekends) (717) 786-9999 or (800)230-2975

-Mark Lipka - House Sale Advisors Real Estate Lancaster & Lebanon County, PA