E is for Earnest Money -- Colorado Real Estate Dictionary

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Real Estate Agent with ERA Herman Group Real Estate

E is for Earnest Money -- Real Estate Dictionary 

Colorado Real Estate  Terms -- Use this glossary to make yourself more prepared

Why do I need to put down Earnest Money when I'm making an offer on a house?   In Colorado, Earnest Money is partially used to show your intention to purchase the property; it is consideration for the contract.   You don't have to put down Earnest Money, as you can also sign some type of promissory note.

I read in the paper that some land was going to be taken by Eminent Domain by the state for a highway, what does this mean?   Eminent Domain is the right of the government to take private property for public use; with just compensation to the owner.

My Realtor said that I should get a survey on the house I'm buying, as the neighbor's tall stucco fence may be encroaching on my land.  What is an encroachmentEncroachments are classified as unauthorized invasion or intrusion of real property onto another's property.  They often incur as the result of poor planning; vs. deliberate intent.

I just got turned down for a loan.  Doesn't the bank have to give me a reason?  Yes, according to the Equal Credit Opportunity Act (EOCA) passed in 1974; lenders must provide the reasons for denying credit to applicants.

Does my Realtor carry E & O Insurance?  Yes, in most states, Realtors are required to carry Errors and Omissions Insurance, which covers liabilities for errors, mistakes and negligence; but it does not cover fraudulent behavior.

Why is my Earnest Money held in Escrow, what does this mean?    Escrow refers to a process of holding money until the satisfaction of the terms and conditions of the contract have been achieved.

Are Realtors held to some type of Ethics?  Yes, Realtors subscribe to a Code of Ethics and are expected to abide by the Code.

Should I get Extended Coverage on my Title Insurance; what does it cover?  Extended Coverage typically covers things that aren't in public records; such as mechanics liens, easement, tax liens.

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Location:
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Rainer
19,728
Hans Iduma
Certified Mortgage Planning Specialist

Hi Kathy, Nice job in compiling this information. Lender are actually required by law to provide the reason for credit denial anytime that an application for a loan is denied. The applicant does not have to request for it.

June 17, 2008 09:47 PM
Rainmaker
316,770
Kathy Torline
Colorado Springs Real Estate Blog 719-287-1049
ERA Herman Group Real Estate

Hans:  Thanks for the update on lender information.  I'll edit the posting to reflect that.

June 17, 2008 09:55 PM
Rainmaker
316,770
Kathy Torline
Colorado Springs Real Estate Blog 719-287-1049
ERA Herman Group Real Estate

Dean and Dean:  Thanks for stopping by!   I've realized as I've been writing these, that I could go on and on with each letter.  Who knows, there may be a part II.

June 17, 2008 10:02 PM
Anonymous #8
Anonymous
Karin

Hi,

Just wondering if you could give me advice on a sticky situation involving earnest money. My sister put down $5,000, which the seller and her broker then kept instead of giving to a title co. for escrow. House didn't pass inspection and my sister's realtor sent amended timelines to the seller and her broker, which they never signed. On the last day of the original deadline, the seller cashed my sister's check and split the money with her realtor. So now my sister's out for $5,000. In my opinion, her realtor should have followed up with the seller and her broker to ensure everybody was on the same page. Whose responsibility was this, and does my sister have any recourse to get her money back?

 

Thanks!

Karin

April 19, 2009 08:40 PM
Rainmaker
316,770
Kathy Torline
Colorado Springs Real Estate Blog 719-287-1049
ERA Herman Group Real Estate

Karin:

Sorry to hear about your sisters problems.

A couple of questions for you:

** Did this happen in Colorado?

** If so, I would have your sister talk to the Managing Broker of her Realtor.   The Managing Broker ultimately has responsibility for the actions of their Realtor.  (Yes, I agree that at first glance it does seem like your sister's realtor should have followed up with the other Realtor to make sure the documents were received.)

** Also, if this happened in Colorado, your sister could contact the real estate commission in Colorado and file a complaint.   Your sister could also contact the Managing Broker of the Listing Agent.

** Also, in Colorado, there are other reasons for a buyer to get out of a contract, including Loan Conditions, Appraisal, Survey etc.   Your sister's realtor could also have done Termination of the Contract and gotten out of the contract for one of these reasons; hence Earnest Money should have been returned.

Hope this helps.

 

 

April 20, 2009 05:38 AM
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Kathy Torline

Colorado Springs Real Estate Blog 719-287-1049
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