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
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
($_________) has been or will be deposited with Seller, pending the closing of the purchase and
THEREFORE, in consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows.
I. EARNEST MONEY
At the execution of this EM Agreement, Buyer is to have deposited with Seller the total sum of
___________________________ dollars ($__________) (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.
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
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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
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
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].
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
To Seller: _______________________________________
To Buyer: _______________________________________
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.
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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.
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]
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Authorized Signature Authorized Signature
Name and Title Name and Title
Name and Title
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[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]
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