Earnest Money

Earnest Money is a good-faith deposit a buyer gives when making an offer to buy a home. It shows the seller that the buyer is serious about purchasing the property.

Think of it like a security deposit for your offer.

Simple example:

• A house costs $400,000.
  
  
• The buyer offers to buy it and includes $5,000 in earnest money.
  
  
• The $5,000 is held in a trust (escrow) account by a broker, attorney, or closing company until the sale is completed.

What happens to the money?

• If the sale closes: The earnest money is applied toward the buyer’s down payment or closing costs.
  
  
• If the buyer cancels for a reason allowed in the contract: (for example, the home inspection finds major problems or financing is denied during a contingency period): The buyer usually gets the earnest money back.
  
  
• If the buyer backs out without a valid reason: The seller may be entitled to keep the earnest money as compensation.
  
  

In Georgia

• Earnest money is not required by law, but it is common in most real estate transactions.
  
  
• The money is usually held in a trust (escrow) account until everyone agrees how it should be distributed or until closing.
  
  

Earnest Money = A deposit that proves the buyer is serious.

It’s not an extra fee—it’s part of the purchase price if the sale goes through.

Manage Earnest Money

All earnest money checks must be made payable to the closing attorney or cooperating brokerage,  and be promptly delivered or deposited into the applicable Trust Account as described in the EARNEST MONEY HANDLING PROCEDURES. CRIM Realty does not hold earnest money.

Cash?

Cash is never an acceptable form of earnest money. Agents are not authorized to accept cash, ever. Simply instruct clients to present a money order or personal check.

Limits and Risks

CRIM Realty recommends that their Agents use their best judgment when guiding their Buyer Clients on the appropriate earnest money to offer on a transaction. Remember, the more earnest money that is offered creates a greater financial risk for the buyer if he/she is unable to close and does not terminate the contract within the time allotments allowed.

Disputes

Should there be any concern about the disposition of the earnest money, Agents will need to assist the Company in bringing these incidents to a reasonable conclusion if possible, but the Agent must do so only with the Broker’s approval and direction. The Company is not in the dispute resolution business and we are not law enforcement officials, so the Company’s ability to enforce contract provisions or create a resolution is limited. Time is of the essence in these occurrences and the ability to bring them to an appropriate conclusion is predicated on our timely and concise action. Delay simply compounds the negatives inherent with the dispute.

For Earnest Money Compliance

Deposit Earnest Money as it states in The Contract:
License law requires that licensees turn in earnest money as soon as possible to the “Holder”/“Escrow Agent” identified in The Contract and in accordance with the terms of the Contract. To avoid unnecessary earnest money deposit/refund transactions, CRIM Realty recommends that agents always select the option in the earnest money delivery section of The Contract which allows for: “the earnest money to be delivered to the Holder/Escrow Agent within (X) days of the Binding Agreement or Acceptance Date of The Contract”.

If the Buyer Does Not Produce Earnest Money:
If the buyer does not deliver the earnest money in accordance with the contract’s delivery terms, and the closing attorney is designated as the Holder/Escrow Agent, the Broker must promptly notify all parties in writing. This notification can only be made after CRIM Realty receives the fully executed contract. Therefore, all agents must submit signed contracts to CRIM Realty within 48 hours (or sooner) to ensure compliance with GREC Rules and the terms of the contract. Failure to do so may result in late document handling fees, a complaint filed with the Georgia Real Estate Commission (GREC), and potential liability for the amount of the earnest money.

Depositing Client’s Earnest Money:
Earnest Money Delivery Options:

• Option 1: Deliver the earnest money check, along with a copy of the executed contract, directly to the closing attorney.
  
  
• Option 2: Deliver the earnest money check, along with a copy of the executed contract, to the cooperating brokerage.

Important:

• Cash is not accepted. CRIM Realty does not accept cash under any circumstances.
• For HUD transactions, earnest money must be in the form of certified funds payable to “HUD” and must be hand-delivered or sent by priority mail to the asset management company within the timeframe specified in the contract.

If the Earnest Money is to be Paid to Another Broker:
Agents may not hold earnest money. Their responsibility is to collect and promptly deliver it to the designated holder. If the earnest money is payable to an attorney or another brokerage -other than CRIM Realty, the check must be hand-delivered or sent using a trackable courier service. Agents should obtain a receipt, keep a copy of the check, and provide the holder with a copy of the executed contract.

For Non-Compliance with GREC Rules on Handling Trust Funds

Compliance with earnest money procedures is mandatory. Failure to follow GREC trust fund requirements may result in:

• substantial fines
• license suspension
• loss of trust account privileges
  
  

Main Causes for Fines and Penalties

These policies are intended to protect both clients and agents by ensuring the proper handling of earnest money:

• Agents who violate company policies may be fined up to $500, at the Broker’s discretion, or have their affiliation with CRIM Realty terminated.
• Any agent who knowingly deposits client funds into an account other than an approved trust account will be reported to the Georgia Real Estate Commission (GREC).
• CRIM Realty reserves the right to recover client funds from the agent by any lawful means, including authorized charges to the agent’s payment method on file.