Common Questions and Answers Pertaining to Earnest Money
IS EARNEST MONEY REQUIRED to make an offer on a home?
Earnest money isn’t required by law in NC, however here in the Triangle area sellers usually always require buyers to put some good faith (earnest money or due diligence fee) into the game.
WHO HOLDS THE EARNEST MONEY?
Any person agreed upon can hold the earnest money. But again here in the Triangle when using the standard OTP it is usually held by the listing firm in a trust account. My recommendation is to be sure whoever is holding the earnest money that they be licensed by the state and the money held in trust or an escrow account to reduce improper use of funds.
WILL I LOOSE MY EARNEST MONEY IF I WALK AWAY FROM THE PURCHASE WITHIN MY DUE DILIGENCE PERIOD?
Not if you as the buyer properly terminate the contract prior to the expiration of the due Diligence Period. You may obtain a refund of the Earnest Money Deposit and and additional Earnest money deposit paid prior to the expiration of the Due Diligence period.
WHAT HAPPENS TO EARNEST MONEY IN CASE OF A DISPUTE?
That’s an excellent question! Under North Carolina law the escrow agent (again usually the listing company) is required to retain the earnest money deposit in their trust or escrow account until a written release from the all parties is received consenting to how it will be dispersed. In other words no money can be released if there is any dispute between a buyer and seller over the return or forfeit of earnest money.
NC law also provides that in the event of a dispute and after providing notice to the disputing parties and waiting 90 days, a real estate broker may deposit a disputed earnest money deposit with the clerk of court for the determination of the rightful owner of the earnest money deposit.
The parties involved have ONE YEAR to file a special proceeding to recover the earnest money. At which time the clerk of court will determine the rightful owner. If no special proceeding is filed within the one year time frame, the money will be deemed unclaimed and delivered to the State Treasurer.