When is earnest money non refundable

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What Is Earnest Money? Understanding Earnest Money. Example of Earnest Money. Does Earnest Money Get Returned? Key Takeaways Earnest money is essentially a deposit a buyer makes on a home they want to purchase.

A contract is written up during the exchange of the earnest money that outlines the conditions for refunding the amount. Earnest money is always returned to the buyer if the seller terminates the deal. Prospective buyers forfeit their earnest money if they decide to back out of a purchase. Article Sources. Investopedia requires writers to use primary sources to support their work.

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Typically, when amending a written contract, good drafting requires that the amendment expressly state what part of the Sale Agreement is to be changed, added, or deleted, and what part is to remain. How Courts Deal With Ambiguity. Opening the door to extrinsic evidence to interpret the document can be a free-for-all, where all parties can point to outside events and statements, supporting their own favored interpretation.

The Take-Away. Had any of these circumstances been considered, they would have likely been addressed at the time. Accordingly, proactive drafting is encouraged. This means:. Menu Close. The earnest money deposit shall be applied towards the purchase price at closing.

If this transaction should fail to close the earnest money deposit shall be forfeited to the Seller. Buyer: Date : Buyer: Date:. Sample 1. Should you miss a deadline, the seller might be willing to give you extra time if something outside of your control kept you from meeting the deadline.

Having a non-refundable deposit: When caught in a bidding war, it is common to leverage the escrow deposit. Sometimes in a competitive market, the seller will leverage certain concessions out of prospective buyers. The seller could include a clause in the contract that says the earnest money deposit becomes non-refundable after a specific date. Accepting this clause can give you a competitive edge, but should the deal not work out, you will lose your deposit.