Earnest Money in an LLC

[Travis Weitthoff]

I'm buying property from an LLC. The LLC has two people in it. There is one person acting as authorization of power for the LLC, and he should be the only person within the LLC that should get the earnest money should I default on the purchase. The seller wants me to address the earnest money check directly to him. I of course think thats a bad idea and I want to address it to the title company.

The seller states that he will not receive the earnest money directly and he will have to split it with the other person in the LLC. In the purchase contract, it states that if the seller does not deliver marketable title he will refund the earnest money to me, the buyer. I still hate the idea of the seller holding the earnest money.

Do I cut him the check(every bone in my body is telling me no)? How do I guarantee only one person will receive the earnest money within the LLC?

Thank you!

[Jessica Zolotorofe]

Hi Travis. Never give earnest money directly to a seller. A lawyer or title company should act as the escrow agent until the deal closes or terminates. As far as who gets the money if you default. It's not your problem. The title company will pay the LLC the money and the LLC will have to figure out how to disburse it in accordance with its operating agreement. That's not for you to bother with. You just write your check to the escrow agent and the contract should control the rest.