What exactly IS earnest money ?

[Steven Mitchell]

So we recently tried selling a house.  The day before closing, the buyers backed out.  No reason was stated.

We only got a quarter of their earnest money.

I was under the impression the earnest money exists to protect the sellers in these situations.  IE sorry the deal didnt go through, heres a little something to help defray your additional holding costs. 

What are the exact rules here? I obviously dont understand what earnest money is.  

[Jim Cummings]

Steven

If the Contract was done on a TAR 1-4 Family Contract, and involved a Texas Licensed REALTOR, a Title Company was most logically holding the Earnest Money. Based on 27+ Years experience, a Title Company will NOT Release Earnest Money until both parties (Buyer & Seller) agree & SIGN OFF on who gets the Earnest Money. Now, there may have been bills due at Closing (Appraisal, Inspections, etc) that reduced the amount available to distribute - but you should have Signed a Release Of Earnest Money form.