top of page

Earnest Money & Option Fee Explained

Delivery of Earnest and Option money:

​

The buyer must deliver the earnest money and option money within 3 days. It must be in one check written out to the title company. The buyer can hand deliver it to the title company, the buyer can wire the money to the title company, the Realtor can pick up the money from the buyer and deliver it to the title company, or the Realtor can request a FEDEX/UPS overnight mailing slip from the title company for the Buyer to then send. 

​

 

Option Fee

The Option Fee is the money set forward to have the opportunity to negotiate repairs of back out during the option PERIOD. Both the fee and time is specified on par. 5 of the TREC 1-4 contract. 

​

Things to note:

  • Option fee is non refundable

  • If agent fails to deliver the option fee to the title company by the 3rd day after the executed contract, the buyer waives their right to the option period. Weekends and Holidays STILL count as option days.

  • Option period ends at 5pm. All negotiations need to be finalized and signed off on before 5pm of the last day of the option period.

​

Earnest Money

​

The earnest money is the good faith deposit to the Seller that the buyer makes. 

Things to note:

  • Earnest Money is refundable if there is still a contingency left in place (Option, Title, Third Party Financing, HOA, etc) There are many outs a buyer can take to back out and retain earnest money, ensure you know them. 

  • If agent fails to deliver the earnest money to the title company by 5 pm of the 3rd day after the executed contract, the buyer is in default of contract. Weekends and Holidays STILL count as days to deliver earnest money.

​

​

​

If neither client is willing to release the Earnest Money or negotiate a split of the Earnest Money then your client will need to email the Title Company requesting the Earnest Money be released to them. The other party has 15 days to respond. If they respond also asking for EM to be released to them the two parties will need to hire a mediator to help resolve the dispute.

bottom of page