Earnest money plays a crucial role in property sale agreements in Delhi. It is a deposit made by the buyer to demonstrate their serious intent to purchase the property. This deposit, typically ranging from 1% to 5% of the property’s purchase price, is held in an escrow account until the transaction is completed.
The primary purpose of earnest money in a property sale agreement Delhi is to provide security to the seller. It reassures the seller that the buyer is committed to the transaction, prompting them to reserve the property and take it off the market. This reduces the risk of the buyer backing out without consequences, which could otherwise leave the seller at a disadvantage.
If the sale proceeds as planned, the earnest money is usually applied towards the buyer’s down payment or closing costs. However, if the buyer fails to meet the terms of the agreement without a valid reason, the seller typically keeps the earnest money as compensation for the time and effort lost in the transaction process.
Overall, earnest money in a property sale agreement Delhi serves as a financial commitment from the buyer, offering protection and assurance to both parties involved in the transaction.