How to Claim Earnest Money From The Holder

The first thing you should know is that the Holder (page 1 of the Purchase and Sale Agreement) of the Earnest Money makes the decision on which party to release the earnest money to based on their interpretation of the contract.  You SHOULD put pressure on them to see it your way based on the facts.  It is possible the Holder will side with the party that hired them if the facts are not clear or they are biased toward that party.  That is why you must make your voice heard by email and/or mail.

The holder of the earnest money is chosen by the buyer and the buyer’s agent.

Only the Principals (buyer and seller) are involved in an earnest money dispute with the Holder. Real estate agents are not parties to this process and cannot facilitate it. We’ve observed that the Holder does not appreciate input from another brokerage, which can negatively influence their decision. The buyer and seller are the strongest advocates for themselves in this situation. Rest assured, we will provide you with all the information necessary to support your case.

Reference your Purchase and Sale Agreement, page 3 , #7, a, b, c, and d.

The Holder of the Earnest Money is required by the contract to disburse the funds in a “reasonable” time period, with a reasonable interpretation of the agreement.

**** Note that the word reasonable allows a lot of flexibility for the Holder and is not clearly defined in the Agreement.

If there’s a dispute, the Holder is required to give all parties (principals) at least ten (10) days’ notice stating to whom and why the disbursement will be made. Any party (principal) may object to the proposed disbursement by giving written notice of the same to the Holder within the ten (10) day period.

OPTION:  You can always propose that the earnest money be equally divided among the parties. Sometimes this can prevent a dispute. The Holder will follow the terms outlined in the Termination Agreement if everyone is in agreement.

What can you do?

1. Email the Holder of the Earnest Money immediately upon termination of your contract with the facts of the transaction that would result in you receiving the earnest money back.
2. Give them your address so they can send you the earnest money.
3. Your reasons should not be opinion-based. The Holder should be looking at the facts of the transaction within the confines of the Agreement. Your response has nothing to do with how you have been inconvenienced, only with how the terms of the Agreement have not been met. Don’t get emotional.
4. Follow up directly with the Holder for their decision, when the earnest money will be disbursed, and where it should be disbursed if you are the recipient.
5. Ask the Holder to take the case to Interpleader in court.  Unfortunately, this often uses up the earnest money in court fees and attorney fees.  
6. If it is a Real Estate Broker that is holding the earnest money, you can file a complaint with the Real Estate Commission.  

Sample Email to Send to the Holder

Sections in blue insert what applies to your contract. You may also attach any “proof” needed to substantiate your claims to make it easier for the holder to make a decision. Proof might be:

• Screenshots of emails with date and time
• Screenshots of emails
• Actual emails or correspondence as attachments

          Date: January 25, 2023

Re: Purchase and Sale Agreement for 1234 Main Street, Alpharetta, GA 30009 – Binding Agreement Date: January 11, 2023

I am the ___________________  (Seller or Buyer)  in this transaction for the Purchase and Sale Agreement terminated with the reason of__________ <insert the reason on the termination sent to you> on _____________ <insert Date on the Termination> and received by me on ____________________ <insert Date you received the termination>

However, the Purchase and Sale Agreement states that the Due Diligence ended 10 days at midnight which was January 21, 2023.  This is your dispute reason.

Therefore, I am due the earnest money of $3,500.00 immediately.

Please send the earnest money ASAP to:

Joe Brown

1234 Main Street

Alpharetta, GA 30009

Please call me with any questions.  770.367.4567.  

Thank you for your time and attention.