When purchasing a boat, one common step in the process is the signing of an earnest money agreement. This agreement serves as a legally binding contract between the buyer and seller, outlining the terms of the sale and ensuring that both parties are committed to completing the transaction.
An earnest money agreement typically includes details such as the purchase price of the boat, any included equipment or accessories, the deadline for the sale to be completed, and any contingencies that may affect the sale. For example, the agreement may include a contingency that the sale is dependent on the buyer obtaining financing for the purchase, or that the boat passes a satisfactory inspection.
One of the most important aspects of an earnest money agreement is the amount of the earnest money deposit. This deposit is a sum of money that the buyer puts down as a show of good faith, and it is usually a percentage of the purchase price. The deposit is held in escrow and will be applied to the purchase price of the boat at closing.
If either party breaches the terms of the agreement, the earnest money deposit may be forfeited. For example, if the buyer fails to obtain financing or the seller fails to provide clear title to the boat, the earnest money deposit may be forfeited to the other party.
It is important for both buyers and sellers to carefully review and understand the terms of the earnest money agreement before signing. If there are any questions or concerns, it is advisable to seek the advice of an attorney or other legal professional.
In summary, an earnest money agreement is a critical step in the boat buying process, providing both parties with certainty and peace of mind as they move towards closing. By carefully reviewing and understanding the terms of the agreement, buyers and sellers can ensure a smooth and successful transaction.