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What if the Earnest Money Deposit Deadline is missed?
The Northern Virginia Association of Realtors (NVAR) Contract specifies that the Earnest Money Deposit is due ____ Business Days after Ratification.
If Buyer misses the EMD deposit deadline, can that be cured? Yes, you can cure as long as the Seller has not yet Delivered the Notice to Void the Contract.
What Happens to the Earnest Money Deposit if the Contract voids or if the closing does not occur?
Both Seller and Buyer must agree to disbursement of the EMD for it to be released. The NVAR contract does not contain a provision for automatic release of the Deposit. Importantly, even if you believe that one Party or the other should get the Deposit, if the other Party chooses to litigate the matter, it could take a long time to get the money back.
If a Buyer doesn’t perform, but refuses to sign a release to the Contract because they don’t agree with Earnest Money Deposit disbursement, can I relist the home as active and can the Seller sign a contract?
If it is unclear whether Buyer is in Default or Seller also breached the contract in some way, the best practice would be to direct Seller to an attorney for a legal opinion regarding relisting the property. It is always important for a real estate agent to ask their broker for advice as well.
As a matter of best practice, do not promise a client they will (or will not) get the Earnest Money Deposit.
The real estate agent is not the seller/buyer’s legal counsel or judge. Likewise, the settlement agent is (typically) not representing the buyer or seller in a real estate transaction. If the case is litigated, the real estate agent could be sued for giving legal advice. Therefore, it is wise for the real estate agent to avoid using phrases like “they are in default” or “they breached” because those are legal determinations. If the client needs legal advice, it is wise for them to retain separate legal counsel to represent their interests.
This article is not intended to provide legal advice. This email does not create an Attorney-Client relationship, and nothing set forth herein is to be construed as legal advice or as a substitute for the advice of a duly licensed attorney. Seek legal counsel from an attorney admitted to practice in your jurisdiction if you need legal advice or representation.
