Using Form 355-T to Demand Funds from the Buyer
QUESTION: One of my listings went under contract this morning with an assurance from the buyer’s agent that the earnest money deposit and due diligence fee would be delivered by noon today. It is now 2 p.m., and the buyer’s agent is not responding to my messages. I think the buyer might be dragging their feet intentionally. What is the best way to motivate the buyer to deliver the money?
ANSWER: We would encourage you to use Form 355-T, which is titled “Notice to Buyer to Deliver Cash or Immediately Available Funds.” Paragraph 1(d) of the Offer to Purchase and Contract (Form 2-T) provides a mechanism for the seller to employ in these situations. If the buyer fails to timely deliver the Initial Earnest Money Deposit or the Due Diligence Fee, then the seller can make a demand in writing for those funds. Once the demand is made, the buyer has one (1) banking day to comply, and the funds must be delivered in the form of “cash, official bank check, wire transfer or electronic transfer” to the seller.
If you deliver the demand using Form 355-T today, and the buyer does not comply by the end of the next banking day, then your client can use Form 352-T to terminate the contract (or Form 353-T if the property is a vacant lot or land). Note that because the buyer will have one banking day to comply, notice given over a weekend or holiday will affect how many days the buyer will have to come into compliance. For example, if you gave the notice on a Saturday with no holiday to account for, the buyer would have until the end of Monday to comply.
Brokers should also note that because time is of the essence with respect to the delivery of any Additional Earnest Money Deposit, the mechanism in paragraph 1(d) does not apply to those funds. Therefore, if the buyer fails to timely deliver those particular funds, the seller may immediately terminate by using Form 352-T or Form 353-T.
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