A deposit paid in a real estate transaction.
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to pronunciationLegal Definition - A deposit paid (often in escrow) by a prospective buyer (especially of real estate) to show a good faith intention to complete the transaction, and ordinarily forfeited if the buyer defaults. Black's Law Dictionary® Eighth Edition © 2004
Explanation - In a real estate transaction, the buyer often agrees to put some money in the hands of a third party (escrow agent) who then holds the money until the contract is completed and the deal is closed. If the buyer does not complete the deal then the earnest money is paid to the seller. If the transaction closes, the money is often used as part of the purchase price.
Recent Usage - The Dallas-based hotel REIT Ashford Hospitality Trust Inc. has agreed to acquire the 338-room Pan Pacific Hotel San Francisco for $95 million or $281,000 per key. The transaction is expected to close within 45 days. ... Ashford has put up $4 million of non-refundable earnest money, according to the related SEC filing. GlobeSt.com - Luxury Hotel Fetches $95M; $10M Upgrade Planned by Brian Miller.