Earnest money laws colorado

Words used together that have opposite meanings — jumbo shrimp, for example.

A seeming oxymoron is nonrefundable earnest money, a euphemism that some sellers use for a deposit that they intend to keep whether or not the sale goes through. A builder, for example, may ask for such a deposit up front to help offset construction expenses.

The builder uses the term earnest money to avoid upsetting the buyer — even though the builder has no obligation or intention of returning the money.

Most of us understand earnest money to be a deposit made by prospective buyers as evidence of their intention to complete a transaction. Earnest money is often held by a neutral third party, who awaits word that the transaction has closed before forwarding the deposit to the seller.

Monique is afraid an attorney will be costly and that the builder will refuse to revise the contract anyway. The builder begins construction. Then the trouble begins.

Payback Time - Earnest Money - Colorado Attorneys

Alex loses his job. But the builder has a legitimate issue — he needs to close on the house to recoup his costs.

In other words, the buyers bought the house and the seller is holding title to ensure that the buyers make the final payment. The attorney argues, in effect, that the deposit payment represents an equitable mortgage. Based on the decision, the builder would have to foreclose on the equitable mortgage and the buyer would have a limited time to bring the payments up to date.

If the buyer did so, the builder would be whole. If you were the judge, how would you decide? Judges want to provide as much justice as possible to all sides.

In the end, he spent many months, and considerable money, settling a dispute. Navigate the nonrefundable earnest money minefield with extreme caution. When you work for buyers:.

Earnest Money in Colorado | Zillow

Armed with a realistic understanding of the semantics behind the term nonrefundable earnest money, your buyers will be spared misunderstandings, and potentially, lost funds. Disclaimer — Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship.

Earnest Money

Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.

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Payback Time — Earnest Money Posted on December 1, by Oliver Frascona. Alex and Monique sue the builder for return of their deposit. When you work for buyers: If you see the term nonrefundable earnest money, raise a red flag with your clients. Always recommend that your clients have an attorney review their contract.

Remember that earnest money is typically held by a third party, and a downpayment is held by the seller. Are the mineral rights Included?

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