Earnest Money

[jcp0003]

I recently put a contract on a house to be used as a business. The contract was contingent upon 1) Getting a loan, 2) The house passing a home inspection, and 3) The property's ability to be zoned as I needed. I put $1000 dwn as earnest money.

I now learn that my realtor cashed the check before the home inspection was performed. It later failed and I do not intend to buy this property. I have not informed realtor yet. (I want to find out more about the check being cashed first.)

Was the realtor within his rights to cash this check? I have never had this happen before. Typically, I get the check back at closing.

Thanks

Jayson
Nashville, TN

[chachi]

Jayson, every state is different. When you say, "cashed the check" I am assuming you mean they put it in a trust account? In either case, what is the issue? I am assuming you want the money back now, but you have not asked the realtor for it yet? Why not ask?

[ResaleBroker]

Hello Jayson,

It is very common for earnest monies to be deposited into escrow upon "Contract Acceptance." I have worked in several states and haven't heard of earnest money as a rule being deposited only after the removal of contingencies.

As to informing your Realtor, there are usually deadlines for notifying the other party of "Reasonable Dissapproval". If you pass the deadline without giving written notice you might not be entitled to a refund of your earnest deposit.

[fourthring]

I am just getting my license in California, but it is true. The broker can legally deposit the funds into their own trust account. They can not spend it and it is a violation and they can get their license revoked. you should be able to get your money back. Did you have any type of written agreement?