When should you deposit earnest money?

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A woman in a orange shirt signing a check.

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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Categories: Legal
Tags: legal, legal faq, contracts, earnest money, forms


David Davis on 09/29/2015

@ Mary Jane J Beisert I am not sure I understand your post.

I was speaking with Chuck Jacobus, Attorney & Chair of the Texas Real Estate Commission’s Broker/Lawyer Committee and he tells me that this “Rule” only applies is the licensee is acting as the Escrow Agent.

Earnest Money must be deposited upon execution of the contract.

Mary Jane J Beisert on 10/14/2014

Broker/0wners don’t always put
Earnest Money in A Title Co.
They can also have a Savings Esrow Account, interest belongs to the
Name on the depositor of this
Escrow which the Broker/Owner
Could be the Purchaser &
Earnest Money Depositor,
Can hold cash, or jewelry in Safe Deposit Box which is business
With bank required letter of Minutes to this Deposit!
A Titlevto a Vehicle is also been
Excepted on Safe Deposit Box.

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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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