Today I had an email from a REALTOR friend who works in another state telling me that an 88 year old man had walked into a local real estate office and shot the Broker in Charge because he wanted his earnest money back. I have seen many home buyers and home sellers dispute over who should receive the earnest money when a purchase contract is breeched. Usually the home buyer or home seller hires an attorney to write a strong letter stating their case for why it should be returned to them and it is settled outside of court or in small claims court. Shooting the Broker in Charge of a real estate company over a dispute that is totally between a buyer and seller is the most extreme case I have ever heard of. What is the world coming to?
What is Earnest Money?
Earnest money is the deposit a buyer makes to secure his contract to purchase a home. The purpose of earnest money is to show that the buyer is “earnest” about making the purchase. Earnest money is held in a trust account (Normally by the listing company but, can also be held by the buyers agent’s company or an attorney) the earnest money is held until closing and is then credited to the buyer’s purchase.
What Happens to the Earnest Money?
Real Estate contracts are written very clearly when and how buyers forfeit their earnest deposit. However, when a contract is breeched both the buyer and seller must agree in writing to whom the earnest money shall be released to. Until this agreement is made (in writing) the Broker in Charge must hold the money in a trust account. It can never be released until the buyer and seller have agreed in writing how and to whom it will be released or until it goes through the judicial system. Many real estate companies hold earnest money for years until disputes are resolved between home buyers and sellers.
Evidently this elderly man changed his mind about buying a house, believed he was entitled to his money, didn’t like following the trust account rules and regulations and decided to take action against the Broker in Charge instead of the seller. I wonder if he wishes he had kept his gun in his holster and called an attorney instead. Life in prison does have the same sting when it starts at 88 years of age.
Linda