Lesson about Earnest Money
Think your earnest money is safe?
The buyers at 210 Trade thought so when they plunked down their earnest money deposits for a shiny new to-be-constructed condo downtown. Deposits were made from eager buyers for amount ranging from a few thousand dollars all the way up to $80,000. The critical mistake some of them made was that they did not ensure their money was stored in escrow. Now the developer is out of money, filing for bankruptcy and the buyers are very unlikely to see a penny of their deposits back.
Now some potential homeowners are leery of making deposits for yet-to-be contructed homes or condos. To avoid this fear, stipulate your deposit be held in escrow by an attorney or by your agent’s realty company, not by the developer. It is also important to have your Realtor or an attorney craft language in the purchase & sales contract that can let you get your deposit back easily if the developer fails to meet construction deadlines.