Earnest money question

[jasonspragg]

Hi, not sure if this is the right area to ask but it is related to my charger so....
I had a guy come look at my charger and gave me $1000 earnest money, question is, am I allowed to spend that money now or do I have to wait.
From what I have found via the internet is that earnest money is money down making a commitment to purchase my car but if he backs out I keep the money? Am I thinking correctly or if he backs out do I have to give it back?

Looking for suggestions not ridicule

Thanks

[71green go]

best thing I do is write out a receipt that the down payment is Non refundable , and put a date on the receipt that the deal must be complete by.....or else legally you are bound indefinitely .....too many people put sizable downpayments and then either back out or never show up leaving you hanging......
Make sure you BOTH sign and date it and each get a copy........a witness aint a bad idea to sign to
Steve

[Mytur Binsdirti]

Is Earnest money anything like Geoffrey bucks?    

[jasonspragg]

He said he was going to give me another $1000 on Saturday and we are to discuss when he will give the remaining balance of $18000. I pretty much told him tonight that I'd like the remaining balance as quick as possible, he said he has to check his stocks to make sure he doesn't take a big hit on pulling stock money.

I don't think a week is to long, is that reasonable?

[bobs66440]

He said he was going to give me another $1000 on Saturday and we are to discuss when he will give the remaining balance of $18000. I pretty much told him tonight that I'd like the remaining balance as quick as possible, he said he has to check his stocks to make sure he doesn't take a big hit on pulling stock money.

I don't think a week is to long, is that reasonable?

You definitely need to put a limit on the time to wait for the balance. If you are ok with one week and he says he can deliver, then draw up a quick contract stating that any money given you as a deposit is non-refundable as mentioned and give a date that the balance is due. This way, he can't string you along for ever and you can pursue another prospect if he bails on you. Make sure you get CASH! 

[bakerhillpins]

best thing I do is write out a receipt that the down payment is Non refundable , and put a date on the receipt that the deal must be complete by.....or else legally you are bound indefinitely .....too many people put sizable downpayments and then either back out or never show up leaving you hanging......
Make sure you BOTH sign and date it and each get a copy........a witness aint a bad idea to sign to
Steve

Don't forget to put the agreed sale price and the VIN with a description. I would also suggest that witness be a Notary Public. Usually costs a few bucks. Our local bank will do notary public stuff for us for free since we are a customer, yours may as well.

I don't know that I would spend it at all regardless until the deal is done or after you are quite sure that they are finished. It could become a huge quagmire really quickly if you get into a he said/ she said situation.

I know it's sad but I would rather play it safe than sorry. Make sure you CYA as much as you can. I just plain old don't trust the general public at all anymore.  

[1974dodgecharger]

best thing I do is write out a receipt that the down payment is Non refundable , and put a date on the receipt that the deal must be complete by.....or else legally you are bound indefinitely .....too many people put sizable downpayments and then either back out or never show up leaving you hanging......
Make sure you BOTH sign and date it and each get a copy........a witness aint a bad idea to sign to
Steve

you mean a notery be better so its legally bound alot cheaper than a lawyer present.

[Mike DC]

I agree with the other answers.  Put this deal on paper in front of witnesses, set a time limit for the whole thing, and don't spend any of the money until the deal is concluded. 

[stripedelete]

All good suggestions.   

Don't spend the money.  Handing it back to him and walking away maybe the smartest and most expedient course of action if this deal starts to grow fur.   

[PocketThunder]

He said he was going to give me another $1000 on Saturday and we are to discuss when he will give the remaining balance of $18000. I pretty much told him tonight that I'd like the remaining balance as quick as possible, he said he has to check his stocks to make sure he doesn't take a big hit on pulling stock money.

I don't think a week is to long, is that reasonable?

he said he has to check his stocks to make sure he doesn't take a big hit on pulling stock money.

So he agreed to buy the car "IF" "he doesn't take a big hit on pulling stock money".  Sounds like he wants his ernest money back if the stock market tanks.   Oh wait... thats happening now...   

[Brock Lee]

Earnest money is usually refunded if the transaction is cancelled. I am thinking he is using that term rather than "deposit" because he expects a refund if he hits a snag and can't buy the car.

But here is the good part for you. Earnest money shows serious intent to purchase and is money given before a final contract and deal is made. The Earnest money paid gets applied to the final amount agreed on, or if the deal falls through, is returned to the interested party. This means By him calling it "Earnest money" he is showing interest in the car, not making a payment down on an agreed upon deal/contract. The legally binding deal/contract comes after payment of Earnest money. You can come up with your terms now. Make it clear, get it on paper, and have witnesses. Don't spend a penny until you sort this out/or get the rest of the money.

[Lee A]

Yes if you let him give a little here a little there who knows what will happen.Maybe not serious enough either to commit if it were me buying it i would walk up with cash or a certified check dont they have banks to take out loans to buy things any more lol

[Ghoste]

If he is serious about the car he shouldn't have qualms about non-refundable deposits.

[jasonspragg]

As of 930 mst pm he called and said he is buying the car, so I am going to draw up a contract with $2000 down with the remaining amount to paid in a week to 10 days as he said that is the time frame he needs.

Thanks for all the comments 

[Cooter]

This is why I always say "NON REFUNDABLE" Deposit. I'm NOT a bank..I don't hold your money for when your wife hands you your balls back out of her purse and wants to spend your money.

[moparstuart]

This is why I always say "NON REFUNDABLE" Deposit. I'm NOT a bank..I don't hold your money for when your wife hands you your balls back out of her purse and wants to spend your money.

plus once he says he wants to buy it , then your stop advertising and could lose potentional sales on the car holding it for him .  Time lost and possible sales lost ,he should for sure not get all the money back.   

[HeavyFuel]

Earnest money is usually refunded if the transaction is cancelled. I am thinking he is using that term rather than "deposit" because he expects a refund if he hits a snag and can't buy the car.

But here is the good part for you. Earnest money shows serious intent to purchase and is money given before a final contract and deal is made. The Earnest money paid gets applied to the final amount agreed on, or if the deal falls through, is returned to the interested party. This means By him calling it "Earnest money" he is showing interest in the car, not making a payment down on an agreed upon deal/contract. The legally binding deal/contract comes after payment of Earnest money. You can come up with your terms now. Make it clear, get it on paper, and have witnesses. Don't spend a penny until you sort this out/or get the rest of the money.

Your statement is not entirely accurate.


If the seller terminates the agreement for some reason, the buyer gets the earnest money back.   But if the buyer terminates i.e. "changes his mind"...the seller keeps the earnest money, because the seller may have turned away other interested parties in the meantime.

There are obviously exceptions, but that's the way it normally works. 

[74Rallye]

As of 930 mst pm he called and said he is buying the car, so I am going to draw up a contract with $2000 down with the remaining amount to paid in a week to 10 days as he said that is the time frame he needs.

Thanks for all the comments 

Don't let him have the title or the car until it's paid in full. I did a similar deal once and I held the title. The buyer drove the car across the country and the cops said if I wanted the car back I could go and get it. Zero help from the cops in Virginia and Arizona. I even tracked the guy down to his new address and new job. All I could get from the cops was "so go and get it." I could not report the car as stolen because we had a contract. Also, you should return the earnest money if the deal falls through.

[jasonspragg]

contract is drawn up and I for sure will not give keys or title to him till all money is in my hands

[Paul G]

How is this transaction going to take place? Is he giving you checks for the earnest money? If so I would cash them immediately and make him wait 5 or 7 days, according to your banks rules before I would consider the money accepted, or cash them at his bank and get the money from them in $100 bills. Protect yourself. Also if he is paying by bank check do it at his bank and have them give you the bank check. No worries with a bank check the teller hands to you like that and no funny bussines with bad paper. Wire transfers work well too. Once the money is received in your account it is yours. If he is paying in cash do it at your bank and let them check the bills before you sign over the title. Used to be $100 bills were the safest way, not really true anymore.

[1974dodgecharger]

I agree to that also...a scary point (not truely scary) was carrying around 35k in cash to go buy a car in a different state.

Anyways met the guy at some bank that counted it out for us in front of his eyes....

thats the short story..............

How is this transaction going to take place? Is he giving you checks for the earnest money? If so I would cash them immediately and make him wait 5 or 7 days, according to your banks rules before I would consider the money accepted, or cash them at his bank and get the money from them in $100 bills. Protect yourself. Also if he is paying by bank check do it at his bank and have them give you the bank check. No worries with a bank check the teller hands to you like that and no funny bussines with bad paper. Wire transfers work well too. Once the money is received in your account it is yours. If he is paying in cash do it at your bank and let them check the bills before you sign over the title. Used to be $100 bills were the safest way, not really true anymore.

[G-man]

If he gave u 1000 cash. Spend as you need. It is yours. When full payment is made, then he can collect the car and then the sale will be finalized. If he does not pay the remaining balance, in which case he will ask for the $1000 as he changed his mind, you do not have it, as it is spent, and he cant do anything about it because there was no money given. Get it?

Now go spend otherwise you will have to lie that u don't have it.

[bakerhillpins]

I personally would only accept bank wire transfer but that's just me. Bills can be fabricated and unless you can test each and every one you loose if you take it to the bank.  Wire is safe, fast, and cheap and you don't have to carry around all that what If.

It's your transaction, choose what makes you comfortable. Cash at the bank is a good idea, find out how they test for fake though.

[jasonspragg]

he has given all cash, never thought of getting phony bills before.

In the contract I drew up that the earnest money was non refundable, he signed it and understood but also to make him feel safe I added that I wouldn't drive or remove the car and/or parts and wrote down the mileage

[1974dodgecharger]

he has given all cash, never thought of getting phony bills before.

In the contract I drew up that the earnest money was non refundable, he signed it and understood but also to make him feel safe I added that I wouldn't drive or remove the car and/or parts and wrote down the mileage

good deal...