Ask George & Chuck: House can't be relisted or sold with earnest money dispute - Houston Chronicle

In April , a law became effective which allows brokers to include a provision in their purchase contract that permits disputed earnest money to be returned to the buyer after two years. Many brokers amended their contracts to include this provision, however, doing so is optional. If this provision is included in a contract, brokers must ensure that the earnest money is timely returned to the buyer after the two year period. While brokers should make this disbursement as soon as the two year period has run, the law requires that the earnest money be returned by September 1 of that calendar year.

As the law has been in effect for over two years, brokers may be holding disputed earnest money that must be disbursed prior to September 1. It is time to review your trust account records.

Brokers who fail to disburse the money by September 1 could be disciplined by the Ohio Division of Real Estate and Professional Licensing. One goal of the law was to provide clear statutory authority for the handling of disputed earnest money.

A second goal of the law was to establish a process that would create a time limit on how long a broker must continue to hold disputed earnest money. Such a provision is optional. If they fail to notify the broker that they have done either one of these two things, then under the terms of the contract, the broker will return the earnest money to the purchaser without any further notice to the seller.

By including such a provision, brokers are able to disburse these disputed earnest money deposits after two years from the date of deposit.

While brokers will want to make this disbursement as soon as the two year time period has run, this September 1 date is in the law to provide a clear deadline. As September 1 is fast approaching, brokers with this provision in their purchase contract should review their trust account records for disputed earnest money.

If it has been held for over two years and there has been no agreement or notice that a court action to resolve the dispute has been filed, the broker should disburse the funds to the buyer. The law also provides that in the event the broker is unable to locate the buyer, the broker should follow the unclaimed funds laws and remit the money to the Ohio Division of Unclaimed Funds.

In the event of a dispute between the seller and purchaser regarding the disbursement of the earnest money, the broker is required by Ohio law to maintain such funds in his trust account until the broker receives a written instructions signed by the parties specifying how the earnest money is to be disbursed or b a final court order that specifies to whom the earnest money is to be awarded.

Does the license law require that all purchase contracts contain the above noted earnest money provision? Is this provision only available for residential purchase contracts or can it be used for commercial and industrial transactions as well?

I am holding disputed earnest money pursuant to a purchase contract that did not contain the earnest money provision. Can I return the earnest money to the buyer after two years? The ability to return the earnest money to the buyer after two years will only apply to purchase agreements that contain the provision that sets forth that process.

Terminating Contracts and Earnest-Money Disputes | Legal FAQs for REALTORS® | For Texas REALTORS® | Texas Association of REALTORS

This should be clearly stated in the earnest money language included in your purchase contract. What if I miss the two year anniversary of when the money was deposited?

Earnest Money Battles | Realtor Magazine

Will I be disciplined by the Division of Real Estate and Professional Licensing? While brokers should make this disbursement as soon as the two year time period has run, this Sept. If you would return the earnest money after September 1, you could be disciplined by the Division of Real Estate.

What if I mail the earnest money to the buyer, but it is returned undeliverable? Certainly you want to make a good faith effort to find a good address for the buyer.

In the event the broker is unable to locate the buyer, the broker should follow the Unclaimed Funds Laws and disburse the money to the Ohio Division of Unclaimed Funds. Website Design by Marcy Design.

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