New Earnest Money Policy

The change to Ohio law regarding earnest money took affect yesterday. There used to be a problem deciding what to do with earnest money when the contract fell apart and the buyer and seller couldn't agree about who should get the money.

Normally when the contingencies in the contract are not satisfied or if the seller fails or refuses to perform the buyer would receive the earnest money back. Likewise, if the buyer fails or refuses to perform the seller would receive the earnest money.

Previously, when the parties disagreed, but didn't settle the dispute in court the money would remain in the broker's account indefinitely. Now, if after two years the dispute is not settled the earnest money is automatically returned to the buyer without notice to the seller.

Also, previously the buyer would receive their earnest money back at closing in the form of a check that they could apply to the down payment and closing costs or could keep. Now, the earnest money is automatically applied toward the purchase.