Document background
The Earnest Agreement is a fundamental document in U.S. real estate transactions, used when a buyer wishes to demonstrate serious intent to purchase a property. It becomes necessary at the initial stages of a property purchase, typically after price negotiation but before the full purchase agreement is executed. The document details the earnest money amount (usually 1-5% of the purchase price), handling of the deposit, conditions for its return or forfeiture, and its application to the final purchase. This agreement is particularly crucial in establishing good faith between parties and providing legal protection for both buyer and seller throughout the transaction process.
