Earnest Money
A complete guide to what "Earnest Money" means in real estate and how it applies to property transactions in India.
Definition
Earnest money is a deposit made by the buyer to the seller to demonstrate serious intent to purchase a property. It is paid at the time of signing the agreement of sale and is typically adjusted against the final purchase price at closing.
Use of Earnest Money in Real Estate
In Indian real estate, earnest money is commonly referred to as "token money" or "booking amount" and usually ranges from 1-10% of the property price. If the buyer defaults, the seller may forfeit the earnest money. If the seller defaults, they are typically required to return double the amount. Under RERA, the terms of earnest money forfeiture must be fair and clearly stated in the agreement.
Key Takeaway
Understanding "Earnest Money" is essential for making informed real estate decisions. Always consult a qualified professional for advice specific to your situation.
Disclaimer: This glossary is for educational purposes only and does not constitute legal or financial advice. Definitions may not reflect the most current regulatory changes. Please consult a qualified professional for guidance specific to your transaction.