Earnest money

Earnest money — a partial payment (typically 1–5%) that locks a property deal while diligence and financing proceed; under the Civil Code it’s considered part of the price and proof of a perfected sale. The entire craft is in the writing: pay it only under a written agreement stating exactly what happens to it if diligence fails, the loan is denied, or the seller walks — because unpapered earnest money in a failed deal is a donation with extra steps.

First used in: 3.8 · Titles, diligence, and friction