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This Earnest Money Agreement is a form of security deposit made by the purchaser of real property to show that the he or she is serious about completing the transaction. When the transaction is finalized, the funds are put toward the purchase price. If the contract is terminated for any reason other than the purchaser's breach, the deposit is returned to the purchaser. This agreement contains numerous standard clauses that are commonly included in these types of agreements, and it may be customized to fit the specific needs of the contracting parties. This document should be used by a purchaser and seller of real property when entering into a purchase agreement.
Earnest Money Agreement This Earnest Money Agreement is a form of security deposit made by the purchaser of real property to show that the he or she is serious about completing the transaction. When the transaction is finalized, the funds are put toward the purchase price. If the contract is terminated for any reason other than the purchaser's breach, the deposit is returned to the purchaser. This agreement contains numerous standard clauses that are commonly included in these types of agreements, and it may be customized to fit the specific needs of the contracting parties. This document should be used by a purchaser and seller of real property when entering into a purchase agreement. EARNEST MONEY AGREEMENT This Earnest Money Agreement (hereinafter the “EM Agreement”) is made on this ____ day of ____________________ of 20______ by and between _______________________________________ [Seller name/address] (hereinafter the “Seller”) and _______________________________________ [Buyer name/address] (hereinafter the “Buyer”). RECITALS WHEREAS, Seller and Buyer executed an agreement on ______________________, [Instructions: Insert the date the parties agreed to the sale] whereby Seller agreed to sell and Buyer agreed to buy the property described in the attached Exhibit “A” [Comment: user should set forth a description of the property in a separate document and include it as an exhibit to this Agreement] (hereinafter the “Property”) (hereinafter the “Sale Agreement”); and WHEREAS, the Sale Agreement states that a total sum of ___________________ dollars ($_________) has been or will be deposited with Seller, pending the closing of the purchase and sale. THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows. TERMS I. EARNEST MONEY At the execution of this EM Agreement, Buyer is to have deposited with Seller the total sum of ___________________________ dollars ($__________) (hereinafter the “Earnest Money”) as Earnest Money and partial payment of the consideration set forth in the Sale Agreement. The Earnest Money shall be deposited as of the ____ day of ____________________ of 20______. Seller shall invest the Earnest Money in either certificates of deposit issued by commercial banks insured by the federal government, United States Treasury Bonds, or “money market” accounts. II. CLOSING If and when the transaction agreed upon in the Sale Agreement is consummated, Seller shall retain the Earnest Money. Buyer shall be given credit towards the total purchase price set forth in the Sale Agreement for the sum of the Earnest Money retained by Seller. All income earned on the Earnest Money during the escrow period shall be retained by Buyer. III. FAILURE TO CLOSE If the Sale Agreement 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 © Copyright 2013 Docstoc Inc. 2 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 Sale Agreement is breached by Buyer and the sale and purchase fail to close, the Earnest Money shall be retained by Seller as liquidated damages for Buyer’s breach of the Sale Agreement. All income earned on the Earnest Money during the escrow period shall be retained by Buyer. IV. INSTRUCTIONS Seller shall 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 Sale Agreement. If a conflict between Buyer and Seller arises, Seller shall deposit the Earnest Money, plus all income earned during the escrow period, with a court of competent jurisdiction located in the State of ____________________, County of ______________ [Comment: insert county, state]. V. NOTICES Any further correspondence, including documents, requests, notices and other instructions, shall be made in writing and delivered personally or mailed by certified mail to the following addresses: To Seller: _______________________________________ [Seller name/address] To Buyer: _______________________________________ [Buyer name/address] VI. ARBITRATION Any dispute or claim related to or arising from this EM Agreement, its performance, breach, interpretation, validity or enforceability, shall be exclusively (except as provided below) resolved by 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 ____ (__) calendar days of the hearing. The arbitrator will not award attorneys’ fees or punitive, incidental, consequential, treble or other multiple or exemplary damages, and the Parties hereby agree to waive and not seek such damages. Arbitration awards shall be final, binding, and non-appealable, with the exception of the grounds for appeal guaranteed by the Federal Arbitration Act and applicable law. 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. © Copyright 2013 Docstoc Inc. 3 VII. ATTORNEYS’ FEES If judgment is required to enforce the contents of this EM Agreement or provide a remedy for breach thereof, the non-prevailing party shall pay all court costs and attorneys’ fees. VIII. ASSIGNMENT PROHIBITED Both Seller and Buyer are expressly prohibited from assigning this EM Agreement or any rights or interest flowing therefrom. An Assignment shall only occur with the express written consent of both Parties. IX. MODIFICATION This EM 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 EM Agreement shall be interpreted and enforced under the laws of the State of ____________, without regard to conflict of laws principles. Both Parties voluntarily consent to the jurisdiction of all courts in the State of ___________________. XI. ENTIRE AGREEMENT This EM Agreement contains the entire agreement of the Parties, superseding any prior written or oral agreements between them as to the subject matter herein. Any change, modification, or waiver must be in writing and signed by both Parties. IN WITNESS WHEREOF, the parties hereto execute this EM Agreement on this ____ day of ____________________ of 20______. [SIGNATURE PAGE TO FOLLOW] © Copyright 2013 Docstoc Inc. 4 SELLER BUYER Authorized Signature Authorized Signature Name and Title Name and Title WITNESS Authorized Signature Name and Title © Copyright 2013 Docstoc Inc. 5 EXHIBIT A PROPERTY DESCRIPTION [Instructions: Insert or attach a description of the property subject to this agreement. This can be the “legal description” of the property which can be found on the original deed or at the county recorder’s office] © Copyright 2013 Docstoc Inc. 6
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