What is an Earnest Money Agreement?

An earnest money agreement is a contract between a buyer and a seller of real estate. It is also called a real estate purchase and sale agreement. An earnest money agreement must be entirely in writing, and should include all provisions the buyer and seller think are important. Oral agreements regarding sale of real estate are almost always unenforceable.

Many buyers and sellers use preprinted forms of earnest money agreements. Forms printed by the Northwest Multiple Listing Association are probably the most frequently used in King County. The forms address many issues buyers and sellers need to deal with. But forms are not available for all of the issues which can become important.

Buyers and sellers can add to, delete, or change the language in the forms. But they need to be sure they understand what the language means before they sign the agreement. Drafting clear and enforceable language can be more complicated than buyers and sellers may think. When in doubt, have a real estate lawyer draft the language or review it.

If you want to have an attorney review your earnest money agreement and feel you must sign it before seeing your attorney, you can write into the agreement that it is conditioned on review and approval by your attorney on or before a specific time. In setting that time, be sure to allow enough time for the attorney to review it. If you sign the earnest money agreement without this condition, it is a binding contract and you do not have the right to change it even if your attorney would have advised you not to sign it without changes.