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Topsail Island Real Estate, Homes & Vacation Rentals

FAQs - Earnest Money on Topsail Island Real Estate

411 Derrick Drive, Sneads Ferry image
411 Derrick Drive, Sneads Ferry $325,900

A beautifully maintained starter home with lovely landscaping, nestled in a quiet neighborhood of the very desirable community of Nautical Reach has a lot to offer.As you...

  • 3 Beds
  • 2 Baths
  • 100328963 MLS
  • ACTIVE Status
204 W Promenade Lane, Hampstead image
204 W Promenade Lane, Hampstead $989,000

Beautiful low country wrap around porch with over 3700 sq ft of living space in the main house, 3 car garage and a detached 2 car garage with half bath, workshop and 437 ...

  • 5 Beds
  • 6 Baths
  • 100328945 MLS
  • ACTIVE Status
362 Rose Bud Lane, Holly Ridge image
362 Rose Bud Lane, Holly Ridge $359,000

You'll find lots of room inside and out with this home, including a fenced back yard, screened porch and bonus room over the garage. Close to Topsail Beaches, shopping in...

  • 3 Beds
  • 2 Baths
  • 100325663 MLS
  • ACTIVE Status
705 Bayboro Court, Holly Ridge image
705 Bayboro Court, Holly Ridge $334,900

Hello gorgeous!! 4 bedroom, 2.5 bath with rare 3 car garage and extra concrete parking in the highly desirable Village at Folkstone. Upgrades throughout - must see in per...

  • 4 Beds
  • 3 Baths
  • 100328932 MLS
  • ACTIVE Status
341 W Goldeneye Lane, Sneads Ferry image
341 W Goldeneye Lane, Sneads Ferry $539,000

Here's your chance to own your dream home in the desirable, gated, waterfront community Mimosa Bay! This 4 bedroom home has not one, but two master suites, one upstairs a...

  • 4 Beds
  • 4 Baths
  • 100324172 MLS
  • ACTIVE Status
213 Whimbrell Way, Hampstead image
213 Whimbrell Way, Hampstead $565,000

Custom built home by Will Reeves in the desirable, gated neighborhood of Pelican Reef. This split bedroom floor plan has 3 bedrooms on the main level and has elegant mold...

  • 4 Beds
  • 3 Baths
  • 100327932 MLS
  • ACTIVE Status
215 N Stingray Lane, Sneads Ferry image
215 N Stingray Lane, Sneads Ferry $252,000

Location doesn't get any better. This townhome is located minutes from Camp Lejeune, Topsail Beach, and so much more! This updated townhouse offers an open floor plan wit...

  • 3 Beds
  • 3 Baths
  • 100328621 MLS
  • ACTIVE Status
42 Angel Oaks Court, Hampstead image
42 Angel Oaks Court, Hampstead $550,000

Welcome to Pinnacle Ridge! This like-new four year old home is well maintained and bursting with upgrades. It's on a cul-de-sac so no traffic. The front of the house is m...

  • 4 Beds
  • 4 Baths
  • 100328934 MLS
  • ACTIVE Status
402 N Belvedere Drive, Hampstead image
402 N Belvedere Drive, Hampstead $429,900

Welcome Home to the sought-after neighborhood of Belvedere! This light, airy and naturally lit 4-bedroom, 2.5 bathroom, just over 2000 square foot home has so much to off...

  • 4 Beds
  • 3 Baths
  • 100328903 MLS
  • ACTIVE Status
41 E Ridge, Surf City image
41 E Ridge, Surf City $230,000

Today is the day to make your dream come true! Come and create your own beach oasis just steps from the Atlantic. Enjoy this tranquil and serene community just minutes fr...

  • 100328898 MLS
  • ACTIVE Status
Listings provided by North Carolina Regional MLS/

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1. What is “earnest money?”

It is money you give to the seller (or the seller’s agent) to show your good faith when making an offer to purchase the seller’s property.

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2. Do I have to pay an earnest money deposit to have a valid contract?

Although no law requires it, sellers typically do require it. If you agree to pay earnest money but do not make the required payment or your earnest money check “bounces,” you will probably be considered in breach of the contract.

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3. How much earnest money should I pay?

The amount is negotiated between you and the seller. It is typically a small percentage of the purchase price and can vary depending upon local market conditions, the price of the property, the type of property (e.g. vacant land, existing housing, or new construction), whether cash advances to a builder or seller are involved, and other factors.

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4. What happens to the earnest money before closing?

The purchase contract governs where earnest money will go. It should also specify the amount(s) to be paid, when the payments are to be made, whether the money will be held in a trust (escrow) account, who will hold it, whether it will be credited against the purchase price at closing, and what may happen to it if the transaction does not close.

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5. Will my earnest money earn interest between contract and closing?

Probably not. Most earnest money is held by real estate brokers in non-interest-bearing trust or escrow accounts. In order for the money to earn interest, the buyer and seller must agree, and they also must determine who will earn the interest. Such an agreement should be included in the purchase contract and may require the assistance of an attorney to prepare.

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6. Who can hold earnest money?

Any person (or entity) agreeable to you and the seller, but usually a licensed real estate broker. As a buyer, be aware that if you allow earnest money to be held and deposited by a seller or by a builder or developer for use in construction, you risk that they will not be able to return it to you in the event the transaction does not close (due to the seller’s death, divorce, bankruptcy, judgment liens, receivership, fraud, tax liens, title problems, etc.). Consequently, most buyers prefer to have real estate agents or attorneys hold the earnest money deposit. Since they are licensed by the state and required to deposit the money in a trust or escrow account, this reduces the risk that the monies will be improperly used.

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7. Under the standard Offer to Purchase and Contract form*, who holds the earnest money?

The form permits the parties to select who will hold the money - typically, the listing firm. Whenever a licensed real estate firm or agent holds any earnest money, it must be deposited in a trust or escrow account until closing. However, if any addenda are used with the form, check to see whether they conflict with any provisions in the form concerning who will hold the earnest money or other pre-closing deposits. *The Standard Form No. 2-T, Offer to Purchase and Contract is a well-known and widely used form jointly adopted by the North Carolina Bar Association (a voluntary professional association of attorneys) and the North Carolina Association of REALTORS® (a voluntary professional organization of real estate agents).

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8. Is earnest money the same as an option fee?

No. The “option fee” is a separate fee the buyer may choose to pay under the standard Offer to Purchase and Contract for the right to walk away from the transaction during a specified period of time. While earnest money may be refunded under certain circumstances (see below), the option fee is nonrefundable.

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9. What if the standard contract form is not used?

Many developers, builders, employee relocation services and lenders’ asset managers use their own sales contract forms. Generic contract forms are also commonly available and can now be found on the Internet. Many will require you to make an earnest money deposit or similar deposit, but they may differ from the standard form in how it is to be handled. For example, unlike the standard Offer to Purchase and Contract form which contains inspection and repair provisions, title requirements and other protections, there may be no provision allowing you to obtain a refund of the earnest money under any circumstances. Therefore, you must read every contract form carefully and consult with your attorney if you have questions.

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10. If a contract contains a rescission (“cooling off”) period, can I get my earnest money back if I cancel the contract during that time? Probably; however, most purchase contracts do not have a rescission period. Only in certain kinds of transactions will you be allowed (for a limited time) to cancel the contract. These transactions include developer offerings of condominiums, timeshares, and interstate land sales; and where a seller fails to give you certain disclosures in a timely manner, including the Residential Property Disclosure Statement and, (for properties built before 1978) the lead-based paint disclosure. These rescission rights are usually created by state or federal law. The amount of time varies but is typically only a few days. You should consult your own attorney about rescission rights in such transactions.

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11. Isn’t there a federal law that allows me to rescind my home loan and get my earnest money back?

No. Although there is a federal law that gives you three days to cancel a home loan commitment, it does not give you the right to cancel a purchase contract and get a refund of your earnest money. Your obligation to purchase as set forth in the sales contract is unrelated to your right to obtain the best possible loan or avoid a loan that has hidden conditions. Even if the sales contract has a financing contingency clause (such as the one found in the standard Offer to Purchase and Contract form), your cancellation of an approved loan is not one of the conditions that would release you from the sales contract.

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12. Under the standard Offer to Purchase and Contract, do I get my earnest money back if the transaction does not close?

It depends on why the contract isn’t consummated. For example, the standard contract typically includes various conditions and/or contingencies which must be met for the contract to proceed. These may include the requirement that you make a good faith effort to obtain necessary financing or to sell your own property; or that the seller make certain repairs and provide good title. If the seller does not meet his requirements, you may be entitled to a refund. On the other hand, if you breach the contract, you may forfeit the earnest money deposit. The party injured by the breach may also seek additional damages or try to enforce the contract by asking for “specific performance” where a court is asked to compel the breaching party to perform their promise—either to purchase or to sell. If your purchase contract does not close, you should consult your attorney over the remedies that may be available.

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13. What if the contract fails and the seller and I cannot agree on who is entitled to the earnest money?

According to the terms of the standard Offer to Purchase and Contract and the rules governing real estate brokers, if there is a dispute between you and the seller over the return or forfeiture of an earnest money deposit, the broker holding the money must continue to hold the funds in trust until you and the seller resolve the dispute in writing or until a court decides the matter (less than $5000, Small Claims Court; more than $5000, usually District or Superior Court although some cases may go to federal court). The parties may also resolve disputes through voluntary or court-ordered mediation. Alternatively, the broker holding the money may choose to pay the disputed funds to the Clerk of Court in the county where the property is located after first providing 90 days written notice to you and the seller. If the disputed funds are deposited with the Clerk of Court, you would have to initiate a special proceeding with the Clerk to recover the funds. If no one institutes a special proceeding within a year of the funds being deposited with the Clerk, it will be deemed unclaimed and delivered to the State Treasurer’s Office as escheated funds. If an attorney for you holds the earnest money, the attorney must hold or dispose of the funds in accordance with the rules of the North Carolina State Bar. When a form other than the standard Offer to Purchase and Contract is used, it may allow the seller access to the money whether or not the closing occurs as scheduled. In any event, while a broker is not allowed to pursue a claim for earnest money for you, the broker may appear as a witness in court.

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320 N New River Drive

Surf City, NC 28445

(910) 328-5211

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