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I would be curious for anyone with involvement in real estate transactions to share their stories of buyers stopping payment on personal checks.
Have never had it happen. All a bank check does is insure that the funds are there when the check was drawn. Bank checks can be cancelled too. In AZ as a norm, seller or sellers agent never touch the EM Check, it gets deposited with Escrow Co by buyer/BA when escrow is opened. If buyer changes their mind between contract offer/acceptance and opening escrow they can cancel their bank check as easliy as they can cancel a personal check. Like you said Mike, billions of dollars of real estate transactions take place every year with personal checks being written for EM deposits.
In my early days I learned to tell the Buyer "And they deposit this check" very clearly multiple times. I've had a few that did not transfer the funds in time thinking the check was just held till closing.
I would think an EM check that is canceled or not funded would make the contract voidable by the seller if not covered quickly. The Buyer would be in default of the contract.
You just reminded me our agent very clearly told "they will not deposit the check until the offer is accepted". What she neglected to say is she meant when the seller accepts the offer not the bank accepts.
We put a thousand dollar check down for earnest money and had not transfered over the money from account B to account A. Our realtor deposited the check the night we gave it to her. We transfered the funded the next afternoon but were already overdrafted and were charged like $32.
I immediatly contacted her and she stated she would repay us for the overdraft fee but she never did.
Also when we gave the check to our realtor she informed us the $1,000.00 would go toward the purchase price of the house. Our lender later told us that is not correct and we would be getting the $1,000.00 check back after we closed, which is what happened.
Also just a side question is it 'tradition' for the realtor or lending company to get some sort of small home warming gift for the new home owners. We were told by our realtor she was going to come by after we closed on our house and she had a gift for us but she never did contact us again.
You just reminded me our agent very clearly told "they will not deposit the check until the offer is accepted". What she neglected to say is she meant when the seller accepts the offer not the bank accepts.
Banks do not accept offers. They agree or not to finance the purchase.
We put a thousand dollar check down for earnest money and had not transfered over the money from account B to account A. Our realtor deposited the check the night we gave it to her. We transfered the funded the next afternoon but were already overdrafted and were charged like $32.
I immediatly contacted her and she stated she would repay us for the overdraft fee but she never did.
Also when we gave the check to our realtor she informed us the $1,000.00 would go toward the purchase price of the house. Our lender later told us that is not correct and we would be getting the $1,000.00 check back after we closed, which is what happened.
Interesting. I never heard of an earnest money deposit not being applied to the purchase of the property ad reflected on the HUD. ( Just because I have never heard of this, does not mean it does not happen) Was this perhaps unique to this lender or the type of loan you had?
Also just a side question is it 'tradition' for the realtor or lending company to get some sort of small home warming gift for the new home owners. We were told by our realtor she was going to come by after we closed on our house and she had a gift for us but she never did contact us again.
Some agents do this and some do not. That your agent said she would and did not, is curious. Perhaps she left the business. Perhaps she does not do what she says she will do.
I thought it would be applied to the final amount financed and that is what our realtor told us. Our lender said no we will cut you a check for that amount come closing time.
We have definatly decided that next time we will interview or prospective realtor and pick one that seems the most competent instead of simply using the USAA Movers Advantage, or if we do use them we will still tell them we would like to change realtor offices should we feel the need.
The copy is the agent's stipulation that agent has buyer's funds in hand, ready to deliver.
How so?
Quote:
EMD in any form would typically not go to seller but would be held in trust by a real estate firm, closing attorney, or title company.
True, but in your NCAR contract the "Due Diligence" money goes directly to the seller (no escrow). This changes the importance of liquid and secure monies at the time of contract. Perhaps you are mainly a buyers agent, but I hope in NC you would not let your seller accept DD in the form of a personal check. What would your seller’s recourse be if their buyer gets cold feet and cancels the DD check?
When this happens, you can refer your sellers to this thread so they will know that your decision to not recommend secure DD funds was a conscious one.
I know a close friend in NC who had a buyer cancel a 3k DD check. He didnt realize this for a week. He talked with the NCAR who recommended that DD and EM always be paid in secure funds (wire). I guess that is why the NCAR contract has an option for specifying wire transfers of monies.
The copy is the agent's stipulation that agent has buyer's funds in hand, ready to deliver.
EMD in any form would typically not go to seller but would be held in trust by a real estate firm, closing attorney, or title company.
Billions of dollars in real estate successfully conveys yearly with personal checks in the mix.
Billions and billions of dollars.
I have never seen a personal check EMD as an issue, from either side of the table. Of course, the NCAR standard contract indicates that EMD after Due Diligence will be in certified or readily available funds. No personal check. Mostly that is borne of the need for the check to clear before settlement.
I would be curious for anyone with involvement in real estate transactions to share their stories of buyers stopping payment on personal checks.
All of my clients EM checks are deposited with the Title company. They will accept a personal check as long as there is sufficient time for the check to clear. If the check bounces for any reason, the replacement must be a cashiers check or wire transfer.
They will not accept a personal check drawn on a Canadian bank due to the several week lag time for clearing cross border checks.
For closing funds the payment must always be in immediately available funds such as cashiers check or wire transfer.
In Florida I advise principals to a transaction to keep the escrow money in a real estate broker's escrow account rather than a title company's or attorney's. Reason: the Florida Real Estate Commission has a cost-free process for resolution in the event of a disagreement over the money. Title companies and attorneys don't have the free escrow dispute process available to them and the legal fees to contest the situation will often be more than the amount of the deposit. Also, brokers and agents have specified time period for depositing escrow checks. Details below.
Rule 61J2-14.009, Florida Administrative Code (FAC), provides that when a sales associate receives an escrow deposit, he or she must deliver it “to the broker or employer no later than the end of the next business day following receipt of the item to be deposited. Saturdays, Sundays and legal holidays shall not be construed as business days.”
Then, according to Rule 61J2-14.010(1), FAC, "the broker must immediately deposit the escrow deposit in the escrow account. Rule 61J2- 14.008(3), FAC, defines “immediately” as “… the placement of a deposit in an escrow account no later than the end of the third business day following receipt of the item to be deposited. Saturdays, Sundays and legal holidays shall not be considered as business days.”
Have never had it happen. All a bank check does is insure that the funds are there when the check was drawn. Bank checks can be cancelled too. In AZ as a norm, seller or sellers agent never touch the EM Check, it gets deposited with Escrow Co by buyer/BA when escrow is opened. If buyer changes their mind between contract offer/acceptance and opening escrow they can cancel their bank check as easliy as they can cancel a personal check. Like you said Mike, billions of dollars of real estate transactions take place every year with personal checks being written for EM deposits.
Rick, a Cashiers check is probably different from a bank check, because the Cashiers check draws the money from the persons account at the time the check is purchased and becomes immediate funds. The person can't cancel a Cashiers check.
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