Is earnest money required to make a contract effective? | TAR Blog

• 9 April, 2012
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This article was first posted on the Texas Association of Realtor’s Blog.

I sent my client’s offer to purchase a home to the listing agent.  The agent said he wouldn’t present the offer until I sent an earnest-money check.  He also told me that the earnest money had to be included with the offer in order for the offer to become a binding contract, if the seller wanted to accept the offer.  Is that correct? 

No. Earnest money is not necessary to make an otherwise accepted offer into a valid contract.  Earnest money is a buyer performance item that is required to be deposited after a contract is fully executed.  A contract could become effective even if no earnest money is required in the agreement. A seller could instruct a listing agent to present only offers that include an earnest-money check.  However, a listing agent who decided on his own to not present an offer without the earnest money check might be violating his duty to present all offers as quickly as possible (Article 1 of the Code of Ethics).

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