Document background
The Earnest Deposit Agreement serves as a crucial document in U.S. real estate transactions and other significant purchases, providing security to sellers while demonstrating buyers' serious intent. This agreement type is essential when substantial deposits are involved, typically ranging from 1-5% of the purchase price in real estate transactions. The document details how the deposit will be handled, protected, and ultimately distributed, ensuring compliance with state-specific escrow laws and federal regulations. An Earnest Deposit Agreement becomes particularly important in complex transactions or when multiple contingencies exist, as it clearly defines the conditions under which the deposit may be returned or forfeited.
