Non refundable EMD if the buyer walks?
How do you handle the EMD going into a short sale? Do you refund the EMD if the buyer walks or do you have a form signed by the buyer and seller upon inception of the contract as to the disposition of the EMD if the buyer walks?
Replies to This Discussion
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Permalink Reply by Michael Campus ABR,SFR,SRS on
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On the buyer side, I go with EMD to be deposited after lender written approval, because a SS is nothing until then.
On the seller side, I release ALL EMD back to buyer if they cancel. Because, seller is not entitled to EMD, all proceeds from SS go to lender, who is entitled, but only if sale is completed. Alas, if seller was to keep EMD, they would be obligated to turn it over to lender, since it is a part of sale proceeds, not a sum collected to hold property for buyer off the market while closing is arranged and could be liquidated damages for seller if buyer backs out.
In the SS, the seller awaits lender approval as the contingency, and this is what is keeping the home off the market, not the buyers offer.
If someone out there has a valid arguement against my position, I would certainly like to consider it. I can't be right all the time, just most of the time.
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You stated that the binder is "part of sale proceeds." At the point of cancellation of contract, the sale has not closed and the binder is not a part of proceeds. The Seller is the owner of the property, not the lender. What do you do with the binder money? Do you send it to the short sale lender? If there is a 2nd, do you send any money to them?
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