Want info on arbitration real estate earnest money dispute California? Read on for full fledge info on the subject matter…
If you are ever buying property, especially if that is the first time you are doing so, there will come a time when you will feel hesitant and confused. If so, then do not worry. If you search the Internet, articles like this one will help remove your confusion. The point where you feel confused and worried will be the time that the seller or the real estate agent pops the question of earnest money. Not many people have heard of the term so the confusion is totally understandable.
So what is earnest money? It is the amount that the seller or the property dealer wants the buyer to pay before the actual purchase, when an offer is being placed. The sole purpose of this amount is to make the seller realize that this potential buyer is actually interested. It also goes to show that he or she has the necessary finances to make this a quick deal, which is something that all sellers and property owners want.
The amount of the earnest money has always been a bone of contention, and many a deal has gone awry over this issue. While there is no fixed rate and it varies from city to city and state to state, in California it is set around 1 to 3 percent of the selling price. The reason buyers in California do not usually give more than 3 percent of the purchase price is that sign liquidated damages clauses is put off by the purchaser. This clause actually limits the selling party to a maximum of 3 percent of the selling price if a deal, which is approved by both sides.
This way, the purchaser is safe in the knowledge that even if, for any reason of his doing, the deal does not go through, the seller can only keep 3 percent of the selling price or how much ever money he must have paid him as earnest money.
There have been many problems associated with earnest money and its repayment. California’ standard contract procedure states that the earnest money deposit should be returned to the buyer within 17 days in case of default. If this is not done, then the seller is entitled to pay the buyer $1000. However, this is only the case when, upon cancellation of the deal, the buyer and seller sign the mutual release instruction contract that states that the deal was cancelled mutually and the seller does not have any issues. Mostly, though, this is not the case. If the seller believes that he has been wronged and an agreement is not reached, then the money remains with whichever party has it till the problem is resolved and an agreement is reached. This can take months or even years. Therefore, one should always be careful when making a property deal and should state everything up front.
