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Commercial Earnest Money Agreement

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Commercial Earnest Money Agreement Powered By Docstoc
					This is an agreement between a seller and buyer of commercial property whereby the
buyer agrees to deposit earnest money to the seller to show their willingness to
purchase commercial property. Earnest money is defined as partial payment of the
contract to demonstrate that the buyer is serious and willing to demonstrate good faith
about wanting to purchase the commercial property. This document is ideal for entities
or other individuals who want to use earnest money as security for the purchase of
commercial property.
                        COMMERCIAL EARNEST MONEY AGREEMENT

This Agreement made on this ____ day of ____________________, 20______ [Instruction:
Insert date.] between Seller and Buyer, as such terms are defined herein (hereinafter the
“Agreement”).

       BETWEEN:               _______________________________________
                              [Instruction: Insert Seller’s name and address.] (hereinafter the
                              “Seller”),


       AND:                  _______________________________________
                              [Instruction: Insert Buyer’s name and address.] (hereinafter the
                              “Buyer”),

WHEREAS, Seller and Buyer have entered into and executed that certain contract dated as of the
____ day of ____________________, 20______ [Instruction: Insert contract date.], which
shall hereinafter be deemed incorporated by reference (hereinafter the "Contract"), whereby
Seller has agreed to sell and Buyer has agreed to buy the certain commercial real property
described in the attached Exhibit A, which shall be deemed a part hereof and incorporated by
reference upon the terms and conditions set forth in the Contract, including but not limited to,
any agreements regarding rental income, security deposits or otherwise, as the case may be
[Comment: User should set forth a description of the property in a separate document and
include it as an exhibit to this Agreement.]; and

WHEREAS, the Contract states that a total sum of ___________________________ Dollars
($_______________) [Instruction: Insert amount of contract deposit.] has been or will be
deposited with the Seller [Comment: Revise as necessary, if any other party other than Seller
will hold the money.], pending the closing of the purchase and sale pursuant to the terms of the
Contract.

THEREFORE, in consideration of the premises and the mutual covenants contained herein, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows.

   I. EARNEST MONEY

        Within ___ [Instruction: Insert amount of days.] days of the date of this Agreement,
and as set forth in the Contract, Buyer will deposit with Seller the total sum of
__________________________ Dollars ($_______________) [Instruction: Insert amount to
be deposited.] (hereinafter the “Earnest Money”) as Earnest Money and a partial payment of the
consideration under the Contract. Any additional earnest moneys or other deposits to be made as
set forth in the Contract shall be made as set forth therein. Any such deposits shall be held as set
forth herein, as if deposited as Earnest Money. Earnest Money shall not be deemed to include
any rental income, security deposits or other income from the commercial real property in the
Contract.




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        Seller (“Escrowee”) shall hold the Earnest Money in escrow in a segregated bank account
until Closing or sooner termination of this Agreement and shall pay over or apply the Earnest
Money in accordance with the terms of this paragraph. Seller shall hold the Earnest Money in
a(n) non/interest-bearing [Instruction: Delete inapplicable.] account for the benefit of the
parties. If interest is held for the benefit of the parties, it shall be paid to the party entitled to the
Earnest Money and the party receiving the interest shall pay any income taxes thereon. If interest
is not held for the benefit of the parties, the Earnest Money shall be placed in an account as
otherwise permitted or required by law. At Closing, the Earnest Money shall be paid to Seller.
Seller acknowledges receipt of the Earnest Money by check subject to collection and Seller's
agreement to the provisions of this paragraph by signing in the place indicated on the signature
page of this contract. [Comment: If Earnest Money is to be held by an attorney or other
party, other than Seller, additional language may be required to preserve the additional
rights of such party.]

    II. CLOSING

        If and when the purchase agreed upon in the Contract is consummated, Seller shall retain
the Earnest Money. Buyer shall be given credit towards the total purchase price as agreed upon
in the Contract for the sum of the Earnest Money retained by Seller.

    III. FAILURE TO CLOSE

       If the Contract is rescinded or terminated for any reason other than breach by Buyer, the
Earnest Money, in addition to all income earned during the escrow period will be returned to
Buyer. [Comment: Whether to refund the Earnest Money, here, is up to the discretion of the
user. User can alter this language to state that there will be no refund.]

        If the Contract is breached by Buyer and the sale and purchase fail to close as a result of
such breach, the Earnest Money shall be retained by Seller and considered liquidated damages
for Buyer’s breach of the Contract. All income earned on the Earnest Money during the escrow
period shall be retained by Buyer.

    IV. INSTRUCTIONS

       Seller will not return or otherwise distribute the Earnest Money or any income earned on
the Earnest Money during the escrow period without the written consent of both parties to the
Agreement.

         If a conflict between Buyer and Seller occurs, Seller shall deposit the Earnest Money,
plus all income earned during the escrow period, with a court of competent jurisdiction located in
__________________________________ [Comment: Insert city, county, state]. The Parties
shall then bring an action in interpleader. Upon such deposit, Seller shall have no further
liability with respect to such Earnest Money, except as otherwise set forth herein or as required
by law.

    V. NOTICES



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            Any further correspondence, including documents, requests, notices and other
instructions or notice, shall be in writing and delivered personally or mailed by certified mail to
the following addresses:


       To Seller:      _______________________________________
                       [Instruction: Insert Seller’s contact information.]


       To Buyer:       _______________________________________
                       [Instruction: Insert Buyer’s contact information.]

   VI. ARBITRATION

        Any dispute or claim related to or arising from this Agreement but not from the Contract,
its performance, breach, interpretation, validity or enforceability, shall be exclusively (except as
provided below) resolved by final binding arbitration before the American Arbitration
Association (AAA), utilizing AAA Commercial Arbitration Rules.

       The arbitrator shall be selected using AAA procedures. The Arbitrator shall render a
written decision within thirty calendar days of the hearing. The arbitrator will not award
attorney’s fees or punitive, incidental, consequential, treble or other multiple or exemplary
damages, and the parties hereby agree to waive and not seek such damages.

         Awards shall be final, binding and non-appealable, with the exception of the grounds for
appeal guaranteed by the Federal Arbitration Act and applicable laws. All awards may be filed
with one or more courts, state, federal or foreign having jurisdiction over the party against whom
such award is rendered or its property, as a basis of judgment and of the issuance of execution
for its collection.

   VII.    ATTORNEY’S FEES

       If judgment is required to enforce the contents of this Agreement or provide a remedy for
a breach, the non-prevailing party will pay court costs and attorney’s fees. Any judgments
required to enforce the contents of the Contract shall be as set forth in the Contract.

   VIII.   ASSIGNMENT PROHIBITED

        Both the Seller and Buyer are expressly prohibited from assigning this Agreement or any
rights or interest flowing from this Agreement. Any Assignment will only occur with the
express written consent of both parties.

   IX. MODIFICATION




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       This Agreement shall not be modified, rescinded or revoked in any manner whatsoever,
except by written consent of all parties hereto.

   X. GOVERNING LAW AND CONSENT TO JURISDICTION

       This Agreement will be interpreted and enforced under the laws of the State of
____________, [Instruction: Insert state.] without regard to conflict of laws. Both parties
voluntarily consent to the jurisdiction of all courts in the State of ___________________.
[Instruction: Insert state.]

   XI. ENTIRE AGREEMENT

        This Agreement contains the entire agreement of the parties, superseding any prior
written or oral agreements between them on the same subject matter. Any change, modification,
or waiver must be in writing and signed by both parties.

IN WITNESS WHEREOF, the parties hereto execute this Agreement on this ____ day of
____________________, 20______. [Instruction: Insert date.]


SELLER                                            BUYER




Authorized Signature                              Authorized Signature


Name and Title                                    Name and Title



WITNESS




Authorized Signature


Name and Title




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                                Exhibit A




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Description: This is an agreement between a seller and buyer of commercial property whereby the buyer agrees to deposit earnest money to the seller to show their willingness to purchase commercial property. Earnest money is defined as partial payment of the contract to demonstrate that the buyer is serious and willing to demonstrate good faith about wanting to purchase the commercial property. This document is ideal for entities or other individuals who want to use earnest money as security for the purchase of commercial property.