David Saks: Real Estate Practice : Lesson 3729

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Real Estate Practice : Lesson 3729

option

Basically, when a contract is wrtten for real estate two types of contracts are used.

1. The Specific Performance Type

2. A Receipt and Option Type

An 'earnest money' clause can define which is which.

When earnest money is put up we consider this a good faith deposit which is a pretty good indication that the buyer has honorable intentions of purchasing the property.

But let's say, as an example, that the buyer decidesto change his or her mind. The buyer has decided that they don't want the property. The buyer has decided not to go through with the deal.

Now, this is where any items in the contract that have to deal with the earnest money and any conditions associated with it surface. Clauses and conditions surrounding the earnest money are ready for review.

There might be something in the contract, a clause for example, that says that "the seller may keep the earnest money deposit and that the seller may also proceed to take any legal action necessary to force the "specific performance" of the contract, or the seller may sue for "liquidated damages".

Liquidated damages, or ascertained damages, are damages whose amount the parties agree upon during the formation of a contract for the injured party to collect as compensation if the contract is breached.

But let's say for example, that you include an option clause that will limit the seller to only the amount of your earnest money if you fail to perform as the buyer. With an option clause like this the seller can't force you to buy or sue you. But you lose your earnest money, and that's a lot better than losing your shirt, isn't it ?

Now remember, there are some weasel clause that will let you back out of the loan without losing anything.

Any thoughts ?




David Saks



Time&Temp Memphis

Legal Disclaimer
Please be advised that:

 The information and notices contained in this blog are intended to summarize recent developments and news. The posts are presented as general research and information. These posts are not intended, nor should be regarded, as legal advice. Some blog posts concern allegations made in civil lawsuits and in criminal indictments in United States Courts. All persons are presumed innocent until convicted of a crime and proven guilty. Readers who have particular questions or who believe that they need legal counsel should seek the advice of a qualified attorney. It is neither the editor's or author's intention to create a confidential relationship or any broker-client relationship via communication from this site at any time. Please consult with your state real estate board if questions & answers in the education section conflict with the laws of your region or if you need clarification regarding their applicability or how they may govern the services that you provide.

By entering this web site, you understand the following:
When you select a link to an outside Web site, you are subject to the privacy, copyright, security, and information quality policies of that Web site. David Saks:
1.DOES NOT control or guarantee the accuracy, legality, relevance, timeliness, or completeness of information contained on a linked Web site;
2.DOES NOT endorse linked Web sites, the views they express, or the products/services they offer unless linked web sites, the views they express, or the products/services they offer endorse or support David Saks in accordance with the standards of the Tennessee Real Estate Commission and the Federal Government's laws regarding commerce and the application, solicitation and transmission of internet-related concerns, commerce or social networking;
3.CANNOT authorize the use of copyrighted materials contained in linked Web sites;
4.IS NOT responsible for transmissions users receive from linked Web sites;
5. That DavidSaks.Com is biographical & real estate related. Some links within will leave this site.
6. http://activerain.com/profile/davidsaks is internet-compliant & abides by the rules & regulations of the Tennessee Real Estate Commission, Eve Maxwell, Executive Director.
7. Unless indicated otherwise, ActiveRain does offer listings, or IDX and is provided for licensed salespersons, brokers, buyers & sellers of real property as a community & professional service.
8. David Saks is a retired / licensed real estate broker in the State of Tennessee, license #290452, and an independent contractor.
9. Information is believed to be accurate, but not guaranteed, at any realty link or document connected to the World Wide Web & viewable by anyone connected to the internet who has a web browser.
10. Brokers, buyers, sellers, agents & anyone should independently verify any information prior to submitting any offer to purchase goods & services from any link.
11. Please Visit The American Real Estate Alliance or Memphis.8k.Com for additional information regarding property issues for real estate professionals and consumers.

 

Photos © & Licensed by Nova Development

All Content Protected © 
Before you even think about
committing a real estate crime
click this red button.
Real Estate Crimes

© All Rights Reserved.

 

 

 

 

"Information generated by the Department of Justice is in the public domain and may be reproduced, published or otherwise used without the Department’s permission. Citation to the Department of Justice as the source of the information is appreciated, as appropriate."

Department of Justice Legal Policies


 

  Real Estate Crimes

 

Click "HERE" For Today's Question

 

 

TheListen Now!

David Saks Show

Saturday Nite

9pm-12am Central

University of Memphis

WUMR

 

Support
America's Hobby

Click Elvis

Mr.Saks' participation in ActiveRain ended April 13, 2015.

His blog archives will remain online.

May God bless you.

Comment balloon 2 commentsDavid Saks • September 29 2014 08:19AM

Comments

David, Earnest money deposits are not very common in Ohio these days.  There was a time before the market shift where we used to see them more and many of our sales are USDA-RD.

Posted by Sam Miller, Knox County Ohio Real Estate Specialist (RE/MAX Stars Realty) about 5 years ago

Thanks for the note, Sam.

Posted by David Saks ((retired)) about 5 years ago

This blog does not allow anonymous comments