Earnest Money Deposits (EMD)

What is an escrow?

An earnest money deposit (EMD), is money from a buyer to show “good faith” in a sales contract on a home purchase.  The amount of escrow and the time the escrow must be received is written on the sales contract. In addition, the sales contract should also include the title company’s (or lawyer’s) name, address, phone number, email address, and point of contact.  In Florida, title companies are generally used for closing home sales.

Who decides which title company will hold the EMD?

The title company which holds the EMD will be written on the contract.  Generally, the seller will select the title company and pay for owner’s policy and title charges.  If the buyer decides the title company, the buyer will be responsible to pay for the owner’s policy and title charges.

How to verify the EMD

To verify that an escrow has been placed or met, you should follow these steps:

              If buyer gives personal check to their agent (buyer’s agent)

  1. When you write a check to give to your agent, have your agent make a copy of the check then sign and date it for your records.  More than likely your agent will make a copy for his/her office files as well.  Note: The check should be made out to the title company for the total escrow amount that is on the contract.  In the memo portion of the check, write the address of the property you are purchasing.  Once your agent takes possession of the escrow check, they will have a total of three work days (which exclude holidays and weekends) to place such escrow at the designated title company.  As part of my practice, I generally give the escrow to the title company immediately after I receive escrow check.
  2. Once your agent delivers the check to the title company, the agent should get a copy of the check with the date and signature of the person, at the title company, which received it.
  3. Finally, after ten days, your agent should request proof that the escrow was deposited by the title company if confirmation of the escrow deposit has not already been given.  

               If escrow money is delivered via mail

  1. If your escrowed is being mailed, please be sure you have sufficient time on the contract for the escrow to arrive to the title company to keep the contract valid.  Generally, 3-5 days is required to make this happen.  Note: The check should be made out to the title company for the total escrow amount that is on the contract.  In the memo portion of the check, write the address of the property you are purchasing.
  2. On the last day, or before, your escrow delivery time expires (per contract), your agent should contact the title company to be sure your escrow is in place and has reached the title company safely and request a receipt.
  3. Finally, after ten days, your agent should request proof that the escrow was deposited by the title company if confirmation of the escrow deposit has not already been given.
     

               If escrow money is wired to title company

  1. If the escrow is wired to the title company, the buyer should request proof of the wire at the time of the transaction.  In addition, the buyer should ask the wiring company to send a receipt to their agent via email or fax.
  2. After a day or two, your agent should contact the title company to assure the escrow money was successfully delivered to their escrow account and request for a receipt.

 

If you have more questions about EMD or other general real estate questions, please contact me anytime.

Tony Garren

www.GarrenT.com
RE/MAX