The Farah Law Firm

Commercial Earnest Money Refunds Texas

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In the realm of Texas real estate, the focus often falls on residential transactions, governed by the standard Texas Real Estate Commission (TREC) contract. However, commercial real estate transactions in the Lone Star State follow their own set of rules, and understanding them is crucial for both buyers and sellers.

What is Earnest Money in Commercial Real Estate?

In the world of commercial real estate, Earnest Money functions similarly to its residential counterpart. It’s a deposit made by the buyer into an escrow account, demonstrating their commitment to the transaction and providing a buffer for the seller. This deposit not only signifies the buyer’s intent but also often grants them additional time to secure financing for the commercial property they aim to acquire. The unique aspects of earnest money in commercial transactions arise from the specific contractual agreements between buyers and sellers.

Commercial Earnest Money Refunds: The Key Differences

While the general concept of earnest money applies to both residential and commercial transactions, it’s vital to note that the rules and provisions governing its refund in commercial deals differ. Here, we’ll delve into the specific aspects related to commercial earnest money refunds under the TREC contract, focusing on notable distinctions:

  • Termination During Due Diligence Period: Commercial real estate transactions often feature a due diligence period, which parallels the residential option period. This timeframe, typically ranging from a few days to a couple of weeks, allows the buyer to inspect the property thoroughly and decide whether to proceed with the purchase. During this period, the buyer may pay a due diligence fee. If the transaction is terminated during this period, the due diligence fee may be forfeited to the seller, akin to the residential option fee. However, if the buyer terminates the deal for any reason during the due diligence period, the commercial earnest money may still be returned to the buyer, provided that this is stipulated in the contract.


  • Specific Provisions in Commercial Contracts: Just as in residential contracts, commercial contracts often include provisions that dictate the circumstances under which earnest money may be returned to the buyer. These provisions can be highly variable and are crucial for both parties to review and negotiate. For commercial transactions, the specifics of these provisions become even more essential due to the complexity of such deals. It’s recommended to have a qualified Real Estate Attorney review and potentially modify the contract to ensure the protection of the buyer’s and seller’s rights and interests.


  • Commercial Real Estate Attorney’s Role: Commercial real estate transactions are intricate, and the stakes are typically higher than in residential deals. Engaging the services of a knowledgeable Real Estate Attorney specializing in commercial transactions is a wise move. These professionals can navigate the complexities of commercial contracts, ensuring that the terms align with your specific needs and objectives as either a buyer or seller.

Commercial earnest money refunds in Texas are subject to their own set of rules and provisions, distinct from residential transactions. The nuances of commercial deals necessitate a thorough understanding of the contract terms and the involvement of experienced legal counsel to safeguard the interests of all parties involved. Whether you’re a buyer or seller in the commercial real estate market, having a trusted Real Estate Attorney by your side is invaluable in ensuring a smooth and successful transaction.

For all your commercial real estate concerns, including document preparation, closing services, and legal guidance, contact one of our experienced attorneys at The Farah Law Firm. We’re here to simplify the complex world of commercial real estate and protect your rights throughout the process.

The Farah Law Firm is Here to Help You

Our law firm is here to take you step by step through the process. Once a contract is signed, it may be too late or very difficult to correct errors, so let us help you now. Our office is conveniently located in Mansfield, right in the middle of the Dallas-Fort Worth Metroplex. Call our real estate lawyers in Texas today and let our experience and vast knowledge of the Texas Property Code give you peace of mind by ensuring your next purchase or sale is properly executed.

What Our Clients Say About Us

“I was referred to The Farah Law Firm by a friend of mine when I was injured in an auto accident. I am so glad that my friend referred me to Michael and his extremely helpful team. They were not only successful in getting my settlement but also helped me find great doctors to aid in my recovery from the accident. I highly recommend The Farah Law Firm.”

    EDDIE G.

    “Michael, I would like to express my thanks to you and your entire team for all your hard work in getting my case to a fair and generous settlement. I could not have asked for better legal representation for the long and nerve-racking process of my case. You are very compassionate, nice, and extremely good at what you do. I respect your dedication representing the victims of a personal injury cases.”

      TINA L.

      “The Farah Law Firm has an extensive knowledge of business entity transactions in Texas and had kept my transaction moving smoothly and in the right direction. Thank you Michael for making the process easy.”

        ESSAM K.

        “Michael drafted the lease that we will use for our commercial building. He had great communication, was readily available to answer any questions we had, and was very professional. He wrote us a lease that fit our need and I will definitely work with The Farah Law Firm again in the future.”

          CHARLES B.

          “I hired The Farah Law Firm for the non-traditional sale of my residential property. The Farah Law Firm’s professionalism and outstanding knowledge of residential transactions made the sale go smoothly. The Attorneys and staff at the Farah Law Firm were understanding and took the time to explain each step of the process. They will be the ones who I will refer to all my friends and family for any future legal endeavors.”

            LALO T.

            *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.