Handling Earnest Money Deposits

Handling EMD [Earnest Money Deposit]

All CAR Residential Purchase Agreement now has a default paragraph regarding the handling of earnest money deposits which state that the Buyer will deposit directly to Title [Paragraph 3D (1) & 5A (1)].

Keller Williams Policy is for Agents to NOT handle any checks, period.

This includes EMD checks, rent checks [Keller Williams does not allow Property Management], or check for any other reason.

If you ever do have to “touch” a check on behalf of your client, you must follow the Broker Trust Fund Procedure.

1. Enter the check information into the Broker Trust Fund Log at Reception Desk.
2. Photocopy the check & upload to Command.
3. Photocopy the page from the Broker Trust Fund Log & upload to Command.
4. Fill out an envelope with the check information [Client name, Property Address, Check #, Escrow Company, Escrow #, etc.] and insert the check and seal it. That check will need to be kept in a locked cabinet until Title sends a courier to retrieve it. You are no longer allowed to “touch” it unless the transaction fails.
5. If the transaction does not come together, you need to have your clients sign receipt of the copy of the check showing that they received the EMD Check back. You also need to do another entry into the Broker Trust Fund Log that it was returned to the client.
6. This procedure is also necessary if you “touch” a check from you client for any other reason; i.e. a check to pay for inspections, home warranty, etc. Always have your client deal directly with the service provider for payments and you will never have to worry about this.

Increased EMD [Earnest Money Deposit]

1. Whenever there is an increased deposit, RPA paragraph 3D (2) has a default terms that states Buyer will make the “increased” deposit – “Upon removal of all contingencies.”
2. DID [Delivery of Increased Deposit] must be executed to include the “increased” deposit amount as part of the Liquidated Damages provision in the contract.