Paying a home seller "earnest money" prior to completing a home sale transaction is a traditional practice in many property transactions. Earnest money is money that a buyer pays a seller prior to giving the entire payment in order to show the seller that the buyer is serious, or "earnest," about purchasing the property. In South Carolina, specific state laws apply to earnest money transactions. Talk to a South Carolina attorney if you need legal advice about the earnest money laws in the state.
When a real estate buyer agrees to provide an earnest money deposit to a buyer and does so through his real estate agent of broker, the agent has to handle that money responsibly. South Carolina Code section 40-57-135(4) states that upon receipt of the earnest money, the broker must deposit it into a separate real estate trust account within 48 hours, excluding Saturday, Sunday and any bank holidays.
Release of Earnest Money
Any money a real estate broker receives as an earnest money deposit must remain in the trust account until specific conditions are met, according to South Carolina Code section 40-57-135(4)(c). The statute requires that the broker must keep the money in the trust account until the parties complete the real estate sale or exchange transaction, or until the transaction otherwise terminates. The agent must, at the time of distribution, provide the principal with a full accounting of how the money was used.
In some situations, a dispute arises between the buyer and seller about the earnest money deposit. In these situations, the real estate agent has a duty to keep the deposit funds in the trust account until the parties resolve the dispute, according to South Carolina Code section 40-57-135(5). The parties may resolve the dispute with a written agreement or voluntary mediation. If the dispute proceeds to a lawsuit, the broker can deposit the earnest money with the court as soon as the lawsuit is filed, or give the money to either party if so ordered by the court.
While South Carolina's laws govern what happens to the earnest money once provided by a buyer, the law doesn't specify how much of a payment a buyer can, or must make. In general, this amount is up to the buyer and the seller, but according to Earth Available Realty, Inc., a South Carolina realtor, 1 percent of the home price is a good rule of thumb to use to determine the amount paid.