Earnest Money Promissory Note
What is this form?
The Earnest Money Promissory Note is a legal document used in real estate transactions, where a buyer agrees to pay earnest money via a promissory note. This form specifies the terms of the payment, including the amount, interest rate, and due date. It is different from traditional payment methods, as it allows buyers to secure their offer while providing flexibility in payment. This form helps to formalize the buyer's commitment to the purchase agreement.
Main sections of this form
- Parties involved: Names and addresses of the individuals responsible for the note.
- Payment amount: The specific dollar amount being promised as earnest money.
- Interest rate: The rate applied to the unpaid principal until the note is paid.
- Payment terms: The date by which the payment must be made and the designated payment location.
- Property description: Details about the property tied to the earnest money agreement.
When to use this form
This form is typically used when a buyer is making an offer on real estate and intends to provide earnest money in the form of a promissory note. It is useful in instances when the buyer may not have immediate liquid funds but wishes to demonstrate their serious intent to purchase the property. This situation may arise during competitive bidding scenarios or when a buyer is still in the process of securing financing.
Who can use this document
- Potential home buyers seeking to secure a real estate purchase.
- Sellers requiring assurance of earnest money from buyers.
- Real estate agents or brokers involved in the transaction.
- Legal professionals assisting clients with real estate transactions.
Completing this form step by step
- Identify the parties involved by entering the names and addresses of the makers of the note.
- Specify the property by providing a detailed description of the real estate involved.
- Enter the total amount of earnest money being promised.
- Include the interest rate applicable to the principal amount until it is paid.
- Indicate the due date for the payment and where it should be delivered.
- Obtain the signatures of all makers to finalize the note.
Notarization guidance
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Mistakes to watch out for
- Failing to include a clear and complete description of the property.
- Omitting the interest rate, which can lead to disputes later.
- Not specifying a payment location, causing confusion about where to deliver funds.
- Using outdated or incorrect legal forms that may not comply with current state laws.
- Neglecting to sign the document, rendering it unenforceable.
Why complete this form online
- Convenience: Accessible from anywhere with an internet connection.
- Editability: Easily filled out and customized to meet specific needs.
- Reliability: Templates drafted by licensed attorneys ensure legal compliance.
- Time-saving: Instant download eliminates delays associated with traditional forms.
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FAQ
If you back out of the contract for reasons that aren't stipulated by your contract or its contingencies, you could be out your earnest money or, in extreme cases, you could even be sued by the seller. There are few instances that could put you at risk of a seller-driven lawsuit.
The earnest money can be held in escrow during the contract period by a title company, lawyer, bank, or brokerwhatever is specified in the contract. Most U.S. jurisdictions require that when a buyer timely and properly drops out of a contract, the money be returned within a brief period of time, say, 48 hours.
Generally, these funds are held in an escrow account managed by the buyer's real estate agent or the title company. The deposit is then applied to your closing costs or returned to you at closing. Earnest money funds are usually applied to a loan's closing costs or to the down payment.
Assuming the seller does not contest to you getting your earnest money back, then you should both sign release forms. This says that you both agree that the earnest money will be returned to you. Make sure to contact your realtor or lawyer to find out about any other forms you need to sign.
