by Peg Ritenour
Vice president
Legal Services and Administration

As discussed in the last two issues of OHIO REALTOR effective April 6, brokers will be able to include new language in their purchase agreements addressing disputed earnest money. This provision (which is optional for brokers) will give the parties two years from the date the earnest money was deposited in the broker’s trust account to provide the broker with either written instructions on how it is to be disbursed or notice that legal action has been filed with the courts. If neither of these is provided to the broker, the broker can remit the earnest money to the purchaser with no further notice to the seller.

Below is sample language that has been approved by the Ohio Division of Real Estate and Professional Licensing that satisfies the new law. Again, it is not required that brokers include this language in their contracts; it is instead an option available to brokers who choose to use such a provision to resolve earnest money disputes.

In the event of a dispute between the seller and purchaser regarding the disbursement of the earnest money, the broker is required by Ohio law to maintain such funds in his trust account until the broker receives (a) written instructions signed by the parties specifying how the earnest money is to be disbursed or (b) a final court order that specifies to whom the earnest money is to be awarded. If within two years from the date the earnest money was deposited in the broker’s trust account, the parties have not provided the broker with such signed instructions or written notice that such legal action to resolve the dispute has been filed, the broker shall return the earnest money to the purchaser with no further notice to the seller.

In addition to the above language, brokers will of course still want to also include contract language indicating the amount of earnest money received, stating that the earnest money will be deposited in the broker’s trust account and a provision that specifies how it will be disbursed at closing (i.e., credited to purchaser at closing, returned to purchaser at closing, applied to the commission owed the listing broker, etc.)