- Mansfield / Dallas-Fort Worth 2170 Matlock Rd. #110 Mansfield, TX 76063
Getting in touch with a real estate lawyer from Farah Law Firm is the first step in giving you the asset protection you need. Don’t discover the value of such services after the fact.
Most residential real estate contracts in Texas are conducted using the standard Texas Real Estate Commission (“TREC”) contract. Under this contract, there are several instances in which the termination of the transaction results in the Earnest Money being returned to the buyer. Real Property Transactions in Texas can be very confusing and most parties fail to read the entire contract, relying on their agent to look out for their interests.
In real estate transactions, Earnest Money is a deposit made by the buyer into a trust or escrow account. Earnest Money is used to show the seller that the buyer has entered into the transaction in good faith and, oftentimes, allows the buyer additional time to secure financing. When the transaction is complete, the Earnest Money is credited toward the buyer’s down payment. In most situations, if the seller terminates the transaction the Earnest Money is returned to the buyer. However, if it is the buyer who terminates the transaction, the Earnest Money is generally awarded to the seller. In all circumstances, the return of the Earnest Money is governed by the contract between the buyer and seller.
This article will focus on the provisions generally found within the TREC contract that specify which party is entitled to the Earnest Money.
An Option Period is length of time determined by the contract, often five to 14 days, during which the buyer can inspect the property and determine whether he/she wants to continue with the purchase of the property. A small fee, the Option Fee, is paid as consideration for this period. The Option Fee is forfeited to the seller if the transaction is terminated during the Option Period. If the transaction proceeds and the property is purchased by the buyer, the Option Fee is often applied to the purchase price.
Generally, if the buyer terminates the transaction for any reason during the Option Period the Earnest Money will be returned to the buyer.
Under the TREC contract, there are often specific provisions that allow for the return of the Earnest Money to the buyer as a result of certain actions of the seller. The remainder of this article will focus on those specific provisions. NOTE: the provisions of the TREC contract can be altered to fit the needs or desires of both parties. To ensure that your rights as a seller or buyer are protected you should have the contract evaluated by a Real Estate Attorney at the commencement of the transaction.
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*Please note: Due to the costs involved and the favorability of land in Texas per contract and common law, we currently are not accepting residential tenant defense cases.
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