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Topsail Island Real Estate, Homes & Vacation Rentals

FAQs - Earnest Money on Topsail Island Real Estate

36 Osprey Drive, North Topsail Beach image
36 Osprey Drive, North Topsail Beach $334,500

BEAUTIFUL WATERFRONT LOT IN OCEAN CLUB VILLAGE WITH A COMMUNITY DEEP WATER DOCK AND GAZEBO FOR OWNERS USE ONLY. OCEAN AND ICWW VIEWS FROM THIS LARGE PIE SHAPED LOT WITH 1...

  • 100368117 MLS
  • ACTIVE Status
143 Saltwater Landing Drive, Hampstead image
143 Saltwater Landing Drive, Hampstead $535,000

Saltwater Landing is a water access community with a pool, playground, sidewalks and a coastal vibe anyone in Surf City would appreciate. This home sits on a large corne...

  • 5 Beds
  • 4 Baths
  • 100368109 MLS
  • ACTIVE Status
416 Salvo Court, Holly Ridge image
416 Salvo Court, Holly Ridge $299,995

Beautiful single level home on a quiet cul de sac located right off of Hwy 17. Home features a covered front porch, in the front, spacious open floor plan with kitchen ba...

  • 3 Beds
  • 2 Baths
  • 100368034 MLS
  • ACTIVE Status
8102 6th Avenue, North Topsail Beach image
8102 6th Avenue, North Topsail Beach $270,000

Wonderful building opportunity in a great area of the Island only 5 miles from Surf City. Less than 400 feet to the public beach access on 6th Ave you are a very short wa...

  • 100368007 MLS
  • ACTIVE Status
182 Camden Trail, Hampstead image
182 Camden Trail, Hampstead $639,000

This highly upgraded ''Otter Model Home'' floor plan is located within a small boutique waterfront & water access community! With a comfortable 2,670 heated square feet, ...

  • 4 Beds
  • 6 Baths
  • 100367989 MLS
  • ACTIVE Status
812 Washington Acres Road, Hampstead image
812 Washington Acres Road, Hampstead $365,000

Ready for your country retreat, here you go and no HOA. Adorable, move in ready home situated on .46 acres of land! Cute 3 bedroom, 2 bathrooms plus bonus home doesn't ge...

  • 3 Beds
  • 2 Baths
  • 100367918 MLS
  • ACTIVE Status
138 Old Farm Road, Hampstead image
138 Old Farm Road, Hampstead $215,000

WOW! Beautiful 3 bed 2 bath home sitting at just a half acre tucked away on Old Farm Road! Brand new roof! Fresh paint along with new floors! Kitchen was completely remod...

  • 3 Beds
  • 2 Baths
  • 100367900 MLS
  • ACTIVE Status
169 Pamlico Drive, Holly Ridge image
169 Pamlico Drive, Holly Ridge $399,000

This beautiful 4 bedroom, 2 bathroom home is located in the desirable Village at Folkstone subdivision in Holly Ridge! The open floor plan creates a spacious and airy liv...

  • 4 Beds
  • 3 Baths
  • 100367886 MLS
  • ACTIVE Status
424 N Shore Drive, Surf City image
424 N Shore Drive, Surf City $1,799,500

Location is everything. This stunning OCEANFRONT home is located in SURF CITY. This home features FIVE spacious bedrooms, THREE and a HALF bathrooms, FULLY FURNISHED and ...

  • 5 Beds
  • 4 Baths
  • 100367856 MLS
  • ACTIVE Status
306 Landing Lane, Sneads Ferry image
306 Landing Lane, Sneads Ferry $310,000

Wow!!! This freshly updated, like-new 3 bed, 2 bath home is conveniently located to local businesses, schools, and shopping, featuring a modern open floor plan with vault...

  • 3 Beds
  • 2 Baths
  • 100367727 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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