When should you deposit earnest money?
10/13/2014 | Author: Editorial Staff
I’m representing the buyer in a transaction. He gave me his earnest money check and now the contract is fully executed. When do I have to deposit the earnest money with the escrow agent named in the contract?
TREC Rule 535.146 requires that unless a different time period is agreed upon, any trust money, including earnest money received by the broker, must be delivered to an authorized escrow agent within a reasonable time. The commission has determined “a reasonable time” to be not later than the close of business of the second working day after the date the broker receives the trust money.
A buyer who wants to deposit the money himself should remember Paragraph 5 of TREC contracts, which provides that the buyer shall deposit the earnest money upon execution of the contract. The deposit of earnest money is a buyer obligation once the contract is effective. Like most performance obligations in the contract, time is not “of the essence.” Therefore, the buyer has a reasonable amount of time after the contract is executed by all parties to deposit the earnest money. “Reasonable time” depends upon the circumstances and could be decided by in court if there were a dispute over it.
Since you have the buyer’s earnest money check, you should deposit it as soon as possible to ensure that your buyer is not found to be in default for failure to deposit the earnest money in a timely manner.
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