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A VAR Broker Sales Meeting Kit
EARNEST MONEY DEPOSITS (EMD)
Brokers, c l ick the l ink below to access a re la ted onl ine v ideo.
h t t p : / / www. va r ea l to r. com / SM K- EM D
1VIDEO COMPONENT
http://www.varealtor.com/SMK-EMD
Next , we’ l l go through a ser ies of three Q&As to see how much you know about the topic .
2Q&A/QUIZ COMPONENT
??When does an EMD have to
be deposited?
Q:
5 days
The deposit must occur within five business banking
days following ratification unless otherwise agreed to in
writing by the parties.
A:
??
When dealing with a short sale, the seller and buyer
want to delay depositing the EMD until the lender approves
the deal. Is that OK?
Q:
Yes, if…
Yes, remember parties can agree to a deposit date other
than the standard five business banking days
following ratification.
A:
VAR’s Short Sale Addendum to Residential Contract of Purchase contains language below to meet the preference from the previous Q&A:
The parties agree that the earnest money deposit will be deposited in Escrow Agent’s escrow account (check one):
___ within five (5) business banking days after the date this Contract is fully ratified by Purchaser and
Seller; OR
___ within ___ days after delivery by Seller to Purchaser of notice of lien-holder approval of this
Contract.
VAR RESOURCE
http://www.VARealtor.com/StandardForms
??
I am the principal broker escrow agent; what if my
agent forgets to give me the EMD within five business
banking days? In other words, funds are not deposited until
the 6th day?
Q:
Uh-oh.
This violation must be reported to the Real Estate Board within three business
days. In fact, any escrow violation must be reported.
A:
Mary Smith represents the buyer and is holding the earnest money deposit (EMD) for the buyer and seller. An addendum to the purchase contract states:
Buyer has 30 days to conduct any inspections he wants and may terminate this contract for any reason if he finds something he does not like within those 30 days. If the buyer terminates pursuant to this provision, the escrow agent shall immediately disburse the earnest money deposit to the buyer with no necessary signatures from either party.
The buyer found something he didn’t l ike, terminated the contract, and demanded that Mary give him the EMD. Mary fol lowed the contract and cl ient instructions and released the funds to the buyer. No 30-day letter was involved and no signed release was obtained.
Was this an appropriate action by Mary? Please discuss.
This is where the rubber meets the road. Let ’s ta lk about how to apply topic knowledge to a real -wor ld s i tuat ion.
3 SCENARIO COMPONENT
No, Mary likely violated Real Estate Board Regulations.
A licensee holding the EMD is bound by the REB’s regulations that provide, in a nutshell, the no matter what anybody says, you may not disburse without either the written consent of the buyer or seller, or a court order.
The contract language does not trump Mary’s duties as a real estate licensee to hold on to the EMD until she has obtained a written release as to the funds signed by both parties or a court order.
SCENARIO ANSWER
Vis i t t he VAR webs i t e f o r a g r ow ing l i b r a r y o f v ideos and o t he r t oo l s t o he lp you be success f u l AND law f u l and e t h i ca l i n you r r ea l es t a t e p r ac t i ce .
w w w. VARea l t o r. com
WANT MORE?
Your Virginia Association of REALTORS ® has lots of great legal information for you:
VARealtor.com/LegalResources VARealtor.com/LegalVideos VARealtor.com/EthicsCenter VARealtor.com/StandardForms VARealtor.com/Commonwealth
And look for more Blake in VAR’s Commonwealth Online e-newsletter, at VAR’s annual conferences, and at your local association.