yeah.
I’m told it’s in all standard real estate contracts.
(but is never enforced)
Are you sure the potential buyer didn't pay earnest money, rather than him having paid earnest money and the broker having pocketed it?
In the future, you should tell the broker that if the buyer does not hand over earnest money at contract signing, then there is no contract signing.
It really depends on the state’s real estate & contract law. That’s why I asked about a signed contract. Real estate contracts in NC (my state), have to be in writing, and the earnest money has to be held in a trust account...could be the listing company’s acct, the buyer agent’s company acct, or even the closing attorney account. Trust accounts are heavily, heavily regulated in NC, so it doesn’t matter whose acct it is. The check must be deposited in the trust acct within 3 banking days, or there are stiff consequences. That money is absolutely held in the trust acct until closing or both parties agree to the release.
There’s also a due diligence period for several weeks after going under contract in which the buyer can back out for any or no reason and get the earnest money back. The due diligence period is the time the buyer uses to perform inspections, get the mortgage, hire the attorney. There’s generally a due diligence fee the buyer pays the seller upfront for this “option”. Seller is free to cash that check right then and spend it freely. The due diligence fee is usually much less than the earnest money.
After the due diligence period ends, the buyer is locked in and will probably lose the earnest money should they back out.
However, NC law provides that, if there is any dispute over the earnest money, it has to be held in the trust acct until there is a resolution...which means you’re probably going to see the judge. Small claims court is where most earnest money issues are taken.
Long story short...I’d sue in small claims court (depends on the earnest money amount vs small claims court maximum). Sounds like you should talk to a real estate attorney.
You should always verify the receipt and deposit of the earnest money. If the buyer does not deliver the earnest money as promised, they are in violation of the contract and you can break it.