[WSBARP] Limit on Earnest Money Amount that can be forfeited.

Wed May 13 07:15:45 PDT 2020

This is a residential transaction and the statewide forms contain an 
election of remedies clause, and well over 90% of the time the selection 
is forfeiture of earnest money, eliminating the actual damages remedy.

Also, it's important to realize that the standard NWMLS form provides 
that the listing firm gets to keep one-half the EM in the event of 
forfeiture.  Quite frankly, large earnest monies do not impress me on 
the seller side, although too small of EM can make a buyer's offer 
practically illusory.  I don't think I've ever had a single multiple 
offer situation where the amount of the EM was the deciding factor.

Kary L. Krismer
John L. Scott, Inc.
206 723-2148

On 5/12/2020 3:56 PM, Paul Neumiller wrote:
>
> Remember that the 5% rule is only if the seller wants to use the safe 
> harbor rule of RCW 64.04.005 and not have to prove any damages in 
> order to keep the deposit.  However, if the seller can establish 
> actual damages under the common law caused by buyer’s breach of the 
> contract, then the seller is able to retain a deposit that is greater 
> than the 5%.
>
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> *From:* wsbarp-bounces at lists.wsbarppt.com 
> <wsbarp-bounces at lists.wsbarppt.com> *On Behalf Of *Craig Blackmon
> *Sent:* Tuesday, May 12, 2020 3:30 PM
> *To:* jeff at bellanddavispllc.com; WSBA Real Property Listserv 
> <wsbarp at lists.wsbarppt.com>
> *Subject:* Re: [WSBARP] Limit on Earnest Money Amount that can be 
> forfeited.
>
> https://app.leg.wa.gov/RCW/default.aspx?cite=64.04.005 
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> Craig Blackmon, Attorney at Law 
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> On Tue, May 12, 2020 at 3:27 PM Jeff Davis <jeff at bellanddavispllc.com 
> <mailto:jeff at bellanddavispllc.com>> wrote:
>
>     Listmates,
>
>     Probate estate is selling decedents home.  Buyer wants to put down
>     a large earnest money that amounts to 13% of the purchase price. 
>     Somewhere in the past, it seems our Courts limited the amount of
>     earnest money a Seller can retain on default to somewhere around
>     5% of the purchase price.  Your thoughts would be helpful.
>
>     Jeff Davis
>
>     W. Jeff Davis, Esq.
>
>     BELL & DAVIS PLLC
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>     Sequim WA 98382
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