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Topsail Island Real Estate, Homes & Vacation Rentals

FAQs - Earnest Money on Topsail Island Real Estate

60 Bluenose Lane, Hampstead image
60 Bluenose Lane, Hampstead $219,000

Here is your chance to live in the community Salters Haven at Lea Marina. There are also a few boat slips available as a separate purchase. This homesite is wide enough t...

  • 100387864 MLS
  • ACTIVE Status
445 Summerhouse Drive, Holly Ridge image
445 Summerhouse Drive, Holly Ridge $130,000

No better place to build your waterfront dream home than Summerhouse on Everett Bay! This Resort Style, Luxurious, amenity rich community has it all! Huge clubhouse compl...

  • 100387862 MLS
  • ACTIVE Status
610 Trellis Road, Hampstead image
610 Trellis Road, Hampstead $464,900

Check out this Cotswold plan built by Windsor Homes. Currently being used as the model home for the Terraces community. Downstairs master bedroom with 5' walk in showe...

  • 5 Beds
  • 3 Baths
  • 100387855 MLS
  • ACTIVE Status
106 Grist Mill Road, Hampstead image
106 Grist Mill Road, Hampstead $599,000

Welcome to this stunning craftsman-style home in the desirable Pelican Reef neighborhood. Built in 2020, this modern farmhouse-style residence offers an exquisite blend o...

  • 3 Beds
  • 3 Baths
  • 100387797 MLS
  • ACTIVE Status
1308 Carolina Boulevard, Topsail Beach image
1308 Carolina Boulevard, Topsail Beach $700,000

Rare Sound Front Lot on the South end of Topsail Island! An opportunity that comes along once in lifetime, build your dream beach home of your own design on this gorgeou...

  • 3 Beds
  • 2 Baths
  • 100387779 MLS
  • ACTIVE Status
818 N New River Drive Unit #100, Surf City image
818 N New River Drive Unit #100, Surf City $607,000

Rare to the market!! Beautiful end unit townhome in Surf City! Gorgeous ocean views! Deeded walkway beach access. No HOA fees. A must see! Walking distance to shops, re...

  • 4 Beds
  • 4 Baths
  • 100387724 MLS
  • ACTIVE Status
1202 Daisy Court, Holly Ridge image
1202 Daisy Court, Holly Ridge $425,000

Welcome to the peaceful community of the Neighborhoods of Holly Ridge. Wind your way through the charming streets with cottage-style homes, ponds, parks and walking trai...

  • 3 Beds
  • 2 Baths
  • 100387632 MLS
  • ACTIVE Status
2000 New River Inlet Road Unit #3001, North Topsail Beach image
2000 New River Inlet Road Unit #3001, North Topsail Beach — St. Regis $449,888

Welcome to your own slice of paradise! This stunning 3-bedroom, 2-bathroom unit is one of the largest 3 bedrooms at St Regis, so finding this size unit for sale is an opp...

  • 5 Beds
  • 2 Baths
  • 100387607 MLS
  • St. Regis Bldg.
  • ACTIVE Status
732 Azalea Drive Unit #414, Hampstead image
732 Azalea Drive Unit #414, Hampstead — Plantation Pointe $175,000

Endless potential for this 2nd floor condo overlooking the 10th hole of the Ironclad Golf Course. The 1,160 square foot open floor plan offers a spacious living room and ...

  • 2 Beds
  • 2 Baths
  • 100387575 MLS
  • Plantation Pointe Bldg.
  • ACTIVE Status
230 Oakmont Drive, Hampstead image
230 Oakmont Drive, Hampstead $345,000

This house feels like home. Located on about an acre in the coveted Topsail School District, there's plenty of room both outdoors and in, to live, play and expand. Insi...

  • 3 Beds
  • 3 Baths
  • 100387350 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

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