TEST: VAR Sales Meeting Kit: Earnest Money Deposits

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TEST: VAR Sales Meeting Kit: Earnest Money Deposits

  1. 1. A VAR Broker Sales Meeting Kit EARNEST MONEY DEPOSITS (EMD)
  2. 2. Brokers, click the link below to access a related online video. http://www.varealt or.com/SMK-EMD 1VIDEO COMPONENT http://www.varealtor.com/SMK-EMD
  3. 3. Next, we’ll go through a series of three Q&As to see how much you know about the topic. 2Q&A/QUIZ COMPONENT
  4. 4. ?? When does an EMD have to be deposited? Q:
  5. 5. 5 days The deposit must occur within five business banking days following ratification unless otherwise agreed to in writing by the parties. A:
  6. 6. ?? When dealing with a short sale, the seller and buyer want to delay depositing the EMD until the lender approves the deal. Is that OK? Q:
  7. 7. Yes, if… Yes, remember parties can agree to a deposit date other than the standard five business banking days following ratification. A:
  8. 8. VAR’s Short Sale Addendum to Residential Contract of Purchase contains language below to meet the preference from the previous Q&A: The parties agree that the earnest money deposit will be deposited in Escrow Agent’s escrow account (check one): ___ within five (5) business banking days after the date this Contract is fully ratified by Purchaser and Seller; OR ___ within ___ days after delivery by Seller to Purchaser of notice of lien-holder approval of this Contract. VAR RESOURCE http://www.VARealtor.com/StandardForms
  9. 9. ?? I am the principal broker escrow agent; what if my agent forgets to give me the EMD within five business banking days? In other words, funds are not deposited until the 6th day? Q:
  10. 10. Uh- oh. This violation must be reported to the Real Estate Board within three business days. In fact, any escrow violation must be reported. A:
  11. 11. Mary Smith represents the buyer and is holding the earnest money deposit (EMD) for the buyer and seller. An addendum to the purchase contract states: Buyer has 30 days to conduct any inspections he wants and may terminate this contract for any reason if he finds something he does not like within those 30 days. If the buyer terminates pursuant to this provision, the escrow agent shall immediately disburse the earnest money deposit to the buyer with no necessary signatures from either party. The buyer found something he didn’t like, terminated the contract, and demanded that Mary give him the EMD. Mary followed the contract and client instructions and released the funds to the buyer. No 30-day letter was involved and no signed release was obtained. Was this an appropriate action by Mary? Please discuss. This is where the rubber meets the road. Let’s talk about how to apply topic knowledge to a real-world situation. 3SCENARIO COMPONENT
  12. 12. No, Mary likely violated Real Estate Board Regulations. A licensee holding the EMD is bound by the REB’s regulations that provide, in a nutshell, the no matter what anybody says, you may not disburse without either the written consent of the buyer or seller, or a court order. The contract language does not trump Mary’s duties as a real estate licensee to hold on to the EMD until she has obtained a written release as to the funds signed by both parties or a court order. SCENARIO ANSWER
  13. 13. Visit the VAR website f or a growing library of videos and other tools to help you be successful AND lawf ul and ethical in your real estate practice. www.VARealtor.c om WANT MORE? Your Virginia Association of REALTORS® has lots of great legal information for you:  VARealtor.com/LegalResources  VARealtor.com/LegalVideos  VARealtor.com/EthicsCenter  VARealtor.com/StandardForms  VARealtor.com/Commonwealth And look for more Blake in VAR’s Commonwealth Online e-newsletter, at VAR’s annual conferences, and at your local association.
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