Full question:
I am entering into an agreement to purchase a small retail business from the current owner and he requested a small deposit as good faith in order to take it off the market. I don’t want to lose this business opportunity however, I want to protect myself and not lose the binder if the deal does not got to formal contract. The seller requested a deposit of $10,000? Is there a specific form I can use to protect my deposit? Does the seller cash the deposit/check and deposit the funds into an escrow account?
- Category: Contracts
- Subcategory: BuySell Agreements
- Date:
- State: New York
Answer:
Here’s a sample deposit clause you could consider using: Buyers have deposited with Sellers the sum of $__________ as earnest money. This amount will be applied to the cash down payment upon closing. If Buyers need loan approval for any part of the purchase price and are unable to secure it after applying in good faith, the earnest money will be returned in full. However, if within ___ days Buyers do not diligently pursue loan approval, or if they fail to execute necessary documents within ____ days after receiving a loan commitment, they will be considered in default. This contract will expire on (date) at (time). If Buyers have not performed under the contract by this date, Sellers will be entitled to the earnest money without reduction. If the title to the property is defective, the earnest money will be returned to Buyers.
How the funds are held, such as in an escrow account, is negotiable.
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