Meetings are canceled at the last minute. People change their minds for no reason, especially when money is involved. The earnest money receipt is your ticket out of heartbreak when it comes to finalizing property deals on real estate.
Imagine that after depositing money to purchase a property, the seller decides to sell to another buyer without considering you. You can't ask for a refund because no paperwork is made. You can't press charges because you have no legal proof. What do you do then?
The earnest money agreement form is the document issued to the buyer of real estate for the token deposit paid for finalizing the deal.
What's the Difference between Earnest Money Receipt VS Agreement Form?
As we mentioned earlier, the earnest money deposit receipt is issued to the buyer of real estate to confirm the deposit regarding the property. Earnest money receipts are given as a result of a prior verbal agreement made by two parties.
It can also be addressed as a contract form or a legally binding document that states the agreement between two parties. The earnest money agreement form states the contract agreements between the buyer and the seller of a real estate property on the receipt of the buyer's deposit.
What Is Included in an Earnest Money Receipt?
The following are the essential contents of the earnest money deposit receipt:
- Date: The date at which the agent (escrow) receives the earnest money deposit is included in this section.
- Name of the agent: The agent's character, who ensures that an earnest money deposit agreement form is drawn, is also included.
- Money deposited: The amount of money received by the escrow agent is stated in the content of this form. There is space to include the amount of money in both words and figures in the earnest money agreement.
- Mode of payment: Payments can either be made by check, credit card, or other methods.
- Property Address: The physical address of the property is adequately detailed in the earnest money agreement form. All of the details needed to locate the property, like billing address, building number, street name, zip code, city, state, etc.
- Buyer's Name: The buyer's name is added next, followed by his mailing address.
- Seller's Name: The seller's name is also added at the appropriate space, followed by his mailing address.
- Signature: The earnest money holder's signature is also added to this form.
Do You Need an Earnest Money Receipt?
You will need an earnest money receipt if you intend to buy or sell a real estate property. Below are some of the stated reasons why you need the earnest money agreement:
- The earnest money receipt is more like your protection, either as the seller or the buyer. As soon as an earnest money deposit is made to the escrow agent, it means that the seller can take the property out of the market.
- However, if this receipt is not drawn and there is no proper earnest money agreement form to acknowledge this deposit, either the seller or buyer can back out.
- This form protects you from losing other potential and more promising clients as a seller. As a buyer, the seller cannot easily change his mind regarding the sale of the property to you after you have made an official deposit.
- Even if the seller sells this property to someone else, your money is guaranteed and may be refunded. If the seller attempts to break the contract, the right to seek legal redress is yours, and you can rest assured that you may still buy the property irrespective of the buyer's opinion and with damages.
The importance of the earnest money agreement form can not be overemphasized in your property deals. To a greater extent, it enhances the finalization of your deals as you get the offers. It is easier to draft your earnest money forms with the information we have provided above regarding the contents of this receipt. To make your work easier, you can use one of the various earnest money contract templates available with Google search.