CLOSING ATTORNEY AS HOLDER OF EARNEST MONEY REQUIREMENTS

The following two forms must be executed and included with the
contract:
1. GAR Form F510 – Closing Attorney Acting as Holder of Earnest
Money Exhibit. This document specifies who the closing attorney is with
their contact information. It also includes a section to name an alternate
holder who must be a broker. It is very important to name an alternate
holder in case the closing attorney does not timely agree to be the holder.
Otherwise, there would not be a contractual holder of the earnest money to
enforce the terms of the agreement should the earnest money not be
delivered or if there is an earnest money dispute.
2. GAR Form F511 – Agreement of Closing Attorney to Serve as Holder
of Earnest Money (“Escrow Agreement”). The Buyer’s agent must
deliver the fully executed purchase and sale agreement and Escrow
Agreement (F511) to the attorney within two days of the binding agreement
date. The closing attorney must agree to become the holder within five
business days of receiving the entire contract.

Important to remember:

•  If the closing attorney agrees to be the holder of the earnest money, they are

required to follow the procedures set forth in the purchase agreement.
 If the closing attorney does not agree to become the holder of the earnest
money within five business days, the alternate holder automatically becomes
the holder.

•  The buyer (or the buyer’s agent) is responsible for sending the earnest money

to the closing attorney and immediately notifying the seller (or seller’s agent)
when it has been done.

•  If the holder of the earnest money is changed to the closing attorney by an

amendment after the contract is binding, the F510 exhibit needs to be added
to the contract as an exhibit and initialed by both parties. The F511 also needs
to be completed and agreed to by the closing attorney and provided to all
parties.

•  In All-Cash transactions, the closing attorney can hold the earnest money but

in the event of a dispute between the parties regarding disbursement of the
funds, the closing attorney shall not disburse the funds based upon a
reasonable interpretation of the agreement. The only remedy available to the
closing attorney shall be to interplead the funds into a court of competent
jurisdiction.

We recommend that you have RMAA hold earnest money whenever
possible, so we have greater control over compliance and notices.