Contracts
A good-faith deposit made by the buyer when submitting an offer, demonstrating serious intent to purchase.
Earnest money (also called a good-faith deposit) is paid by the buyer when entering into a purchase contract. It signals serious intent and is credited toward the purchase price at closing. In New York, the broker typically holds it in an escrow account. If the buyer defaults, the seller may retain it as liquidated damages. If the seller defaults, the buyer gets a full refund plus potential additional remedies.
Exam Tip
Earnest money is not the down payment; it becomes part of it at closing. Buyer default: seller keeps it. Seller default: buyer gets it back.
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Contracts
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NY Real Estate Contracts
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