The Role of a Real Estate Attorney in Resolving Earnest Money Disputes

Earnest money is a vital aspect of real estate transactions. Earnest money shows a buyer’s commitment to purchasing a property. However, disputes over earnest money deposits are not uncommon. These disputes can arise due to various reasons. When earnest money disputes occur, hiring a real estate lawyer can be highly beneficial. In this article, we discuss the crucial role that real estate attorneys play in resolving earnest money disputes.

Defining Earnest Money

Earnest money is money a buyer pays a seller to show they are serious about purchasing the property. Earnest money goes into an escrow account as the buyer waits to close on their property. After a buyer pays the earnest money deposit, the seller takes the property off the market. Earnest money is a small percentage of the purchase price, usually 1% to 3%. However, the amount can vary significantly depending on several factors, such as market conditions and local customs.

Reason for Earnest Money Disputes

Earnest money disputes can occur for various reasons, including the following;

• Buyer’s change of heart: When a buyer changes their mind about purchasing a property, they may try to get their earnest money deposit back. This can cause disputes if the seller does not agree that the buyer should get their money back.
• Breach of contract: If the buyer or seller breaches the contract, disputes may arise over who is entitled to the earnest money deposit.
• Unmet contingencies: If, for example, the buyer is unable to secure financing by the agreed-upon deadline or the home inspection reveals significant issues, issues may arise over the refund of the earnest money deposit.

The Role of a Real Estate Attorney in Resolving Earnest Money Disputes

When earnest money disputes arise, it is best to hire a real estate attorney. An attorney can play a vital role in navigating the complexities of the situation. Below are some of the ways a real estate attorney can help if you are dealing with an earnest money dispute;

1. Legal Guidance

A real estate attorney can provide essential legal guidance to help you understand your legal rights and obligations under the agreement. A skilled attorney can help you make informed decisions about how to proceed based on the specific circumstances of your dispute.

2. Reviewing and Analyzing the Contract

A qualified real estate attorney can review and analyze the contract and advise on how to navigate the dispute effectively. They can identify issues, such as ambiguous language, in the contract that could be significant in resolving the dispute. 

3. Negotiation

In many cases, earnest money disputes can be resolved through negotiation. A real estate lawyer can negotiate on your behalf. Real estate attorneys are skilled negotiators. An attorney can help you reach a solution that is satisfactory for both parties, avoiding the need for litigation.

4. Court Representation   

If it becomes necessary to litigate the case, a real estate attorney can prepare legal documents, collect evidence, and effectively present a strong case in court to advocate for their client’s best interests and ensure the best possible outcome.

Contact Us for Legal Help

Contact our skilled Real estate attorneys at SAC Attorneys LLP for legal help if you are dealing with an earnest money dispute.