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Earnest Money

Contents

Overview

This demonstrates common scenarios in which the earnest money can be reflected on the settlement and closing statements, how to post the earnest money to the file, and how to generate earnest money receipts.

Version History

VersionDate

ID

Description

Pre 8.26

 

 

Information and screenshots created in version 9.10

Entering Earnest Money

Agent Bringing Earnest Money to Closing

The agent holds the earnest money and brings it to the settlement agent or title company at the time of closing.

NOTE: While either the listing or selling agent may hold earnest money, for simplicity in this job aid all examples will use the listing agent.

File/New Loans

  • Enter the total Earnest Money amount. This will display on the settlement reports.
    • When saving or navigating away from the New Loans panel, a pop-up message will notify the user that updates will occur due to changes made.
      • Click OK.
    • A Commissions pop-up message will display when the earnest money exceeds the commission amount.
      • Select Transfer to Settlement Agent.
      • Click OK.

Settlement/Deposits, Debits, Credits/Deposit or Earnest Money

  • Select the listing agent partner type from the Partner dropdown menu. 
    • If the listing agent was previously added to the file, the partner can be selected in the dropdown menu.
    • If the agent is not on the file, select Add Partner to add the partner to the file.
  • Select Earnest from the Group dropdown menu.
  • The Total auto-populates the amount from the Earnest Money field on the New Loans panel.
  • The Deposit Transfer to Settlement Agent box will be auto-checked and will populate with the full amount of the earnest money.

Settlement/Commissions/Commission Listing

  • Select the listing agent partner type from the Partner dropdown menu.
  • Select Print or Group from the Group dropdown menu. (Print is used to keep separate from other disbursements, while Group will combine with other items with the same partner that are also set to Group).
  • Enter the Total manually.
    • Or enter the Percent of Sales Price, if enabled, to automatically calculate commission based on the sales price.

NOTE: Total Listing, Total Selling, and Total display the totals for all listing and selling commissions.

Settlement/Postings

  • In the Receipts area, verify that the amount expected from the agent is the anticipated earnest money amount.
  • In the Disbursements area, verify that the amount expected to be payable to the agent is the anticipated commission amount.

Settlement/Reports

The settlement statements and closing statements are generated from this panel.

  • In the Settlement Statement area, set the Figures option to Borrower/Seller, Borrower, or Seller, then click the CD button to generate the settlement statement.

NOTE: The name of the CD button will change depending on the file type. CD files will have a CD button, 2010HUD and HUD files have a HUD button, and commercial files will have a Commercial Statement button.

  • A Closing Disclosure will display the earnest money in the Summary of Transactions: Section L. Paid Already by or on Behalf of Borrowers at Closing. 
  • The 2010 HUD/ HUD will display the earnest money on line 201 with notations, out of column on lines 506 and 507 including the agent holding the funds and the amount.
  • The 2010 HUD will display the total commissions included in the description on line 700, the listing agent amount out of column on line 701, the selling agent amount out of column on line 702, with the total commissions in column on line 703.
  • The HUD will display the listing agent commission amount out of column on line 701, the selling agent commission amount out of column on line 702, and the total commissions in column on line 703.

Agent Withholding Earnest Money Less Than Commission

The agent will withhold the entire earnest money from the listing commission. The commission is more than the earnest money. The agent will receive a disbursement for the difference.

File/New Loans

  • Enter the total Earnest Money amount. This will display on the settlement reports.
    • When saving or navigating away from the New Loans panel, a pop-up message will notify the user that updates will occur due to changes made.
      • Click OK.
    • A Commissions pop-up message will display when the earnest money exceeds the commission amount.
      • Select Retained by Earnest Money Partner.
      • Click OK.

Settlement/Commissions/Commission Listing

  • Select the listing agent partner type from the Partner dropdown menu.
  • Select Earnest from the Group dropdown menu. (Earnest will combine the line with other lines also set to the Earnest group).
  • Enter the Total manually.
    • Or enter the Percent of Sales Price, if enabled, to automatically calculate commission based on the sales price.

NOTE: Total Listing, Total Selling, and Total display the totals for all listing and selling commissions.

Settlement/Deposits, Debits, Credits/Deposit or Earnest Money

  • Select the listing agent partner type from the Partner dropdown menu. 
    • If the listing agent was previously added to the file, the partner can be selected in the dropdown menu.
    • If the listing agent is not on the file, select Add Partner to add the partner to the file.
  • Select Earnest from the Group dropdown menu.
  • The Total amount auto-populates from the Earnest Money field on the New Loans panel.

Settlement/Postings

  • In the Disbursements area, verify that the amount expected to be payable to the agent is the anticipated commission amount less the earnest money.

NOTE: Double-click on the disbursement in the grid to display the details of the disbursement, including the settlement lines that make up the disbursement.

Settlement/Reports

  • The settlement statements and closing statements are generated from this panel.
  • In the Settlement Statement area, set the Figures option to Borrower/Seller, Borrower, or Seller, then click the CD button to generate the settlement statement.

NOTE: The name of the CD button will change depending on the file type. CD files will have a CD button, 2010 HUD and HUD files have a HUD button, and commercial files will have a Commercial Statement button.

  • A Closing Disclosure will display the earnest money in the Summary of Transactions: Section L. Paid Already by or on Behalf of Borrowers at Closing. 
  • The 2010 HUD/ HUD will display the earnest money deposit on line 201 and on line 506 as earnest money held by the agent.
  • The 2010 HUD will display the total commissions included in the description on line 700, the listing agent amount out of column on line 701, the selling agent amount out of column on line 702, and the total commissions in column on line 703. A note will be inserted out of column on line 704 indicating that the listing agent is retaining the amount as a POC item.
  • The HUD will display the listing agent commission amount out of column on line 701, the selling agent commission amount out of column on line 702, and the total commissions in column on line 703. A note will be inserted out of column on line 704 indicating that the listing agent is retaining the amount as a POC item.

Agent Withholding Earnest Money Greater Than Commission

The agent will withhold the entire earnest money from the listing commission. The commission is less than the earnest money. The agent will bring in the difference to the settlement agent/title company as an anticipated receipt.

File/New Loans

  • Enter the total Earnest Money amount. This will display on the settlement reports.
    • When saving or navigating away from the New Loans panel, a pop-up message will notify the user that updates will occur due to changes made.
      • Click OK.
    • A Commissions pop-up message will display when the earnest money exceeds the commission amount.
      • Select Transfer to Settlement Agent.
      • Click OK.

Settlement/Commissions/Commission Listing

  • Select the listing agent partner type from the Partner dropdown menu.
  • Select Earnest from the Group dropdown menu. (Earnest will combine the line with other lines also set to the Earnest group).
  • Enter the Total manually.
    • Or enter the Percent of Sales Price, if enabled, to automatically calculate commission based on the sales price.

NOTE: Total Listing, Total Selling, and Total display the totals for all listing and selling commissions.

  • When saving or navigating away from the Commissions tab, a Commissions pop-up message will display when the earnest money exceeds the commission amount.
    • Select Transfer to Settlement Agent.
    • Click OK.

 Settlement/Deposits, Debits, Credits/Deposits or Earnest Money

  • Select the listing agent partner type from the Partner dropdown menu. 
    • If the listing agent was previously added to the file, the partner can be selected in the dropdown menu.
    • If the listing agent is not on the file, select Add Partner to add the partner to the file.
  • Select Earnest from the Group dropdown menu.
  • The Total amount auto-populates the amount from the Earnest Money field on the New Loans panel.
  • The Deposit Transfer to Settlement Agent is auto-checked and populates with the calculated difference of the earnest money less the commission.

Settlement/Postings

  • In the Receipts area, verify that the amount expected from the listing agent is the anticipated earnest money amount less the commission.

NOTE: Double-click on the receipt in the grid to display the details of the receipt, including the settlement lines that make up the receipt.

Settlement/Reports

The settlement statements and closing statements are generated from this panel.

In the Settlement Statement area, set the Figures option as Borrower/Seller, Borrower, or Seller, then click the CD button to generate the settlement statement.

NOTE: The name of the CD button will change depending on the file type. CD files will have a CD button, 2010 HUD and HUD files have a HUD button, and commercial files will have a Commercial Statement button. A Closing Disclosure will display the earnest money in the Summary of Transactions: Section L. Paid Already by or on Behalf of Borrowers at Closing. 

  • The 2010 HUD/ HUD will display the earnest money deposit on line 201 and on line 506 as Earnest money retained by the agent. The line description for line 507 will show as Disbursed as Proceeds with the amount shown (out of column).
  • The 2010 HUD will display the total commissions in the description on line 700, the listing agent’s amount will display out of column on line 701, the selling agent’s amount will display out of column on line 702, and the total net commission paid in column on line 703. A note will be displayed on line 704 indicating the amount the listing agent held for earnest money as a POC item.
  • The HUD will display the listing agent commissions amount out of column on line 701, the selling agent commission amount out of column on line 702, and the total commissions in column on line 703. A note will be displayed on line 704 indicating the amount the listing agent held for earnest money as a POC item.

Seller Holding Earnest Money

The buyer will render the earnest money directly to the seller (rather than through the title company or settlement agent). The amount will appear as a credit to the buyer and a debit to the seller at the time of closing.

File/New Loans

  • Enter the total Earnest Money amount. This will display on the settlement reports.
    • When saving or navigating away from the New Loans panel, a pop-up message will notify the user that updates will occur due to changes made.
      • Click OK.
    • A Commissions pop-up message will display when the earnest money exceeds the commission amount.
      • Select Excess Deposit.
      • Click OK.

Settlement/Deposits, Debits, Credits/Deposit or Earnest Money

  • Select the seller partner type from the Partner dropdown menu. 
  • Select Earnest from the Group dropdown menu.
  • The Total auto-populates the amount from the Earnest Money field on the New Loans panel.
  • The Excess Deposit box will be auto-checked and will populate with the full amount of the earnest money.

Settlement/Reports

The settlement statements and Closing Statements are generated from this panel.

  • In the Settlement Statement area, set the Figures option to Borrower/Seller,Borrower, or Seller, then click the CD button to generate the settlement statement.

NOTE: The name of the CD button will change depending on the file type. CD files will have a CD button, 2010 HUD and HUD files have a HUD button, and commercial files will have a Commercial Statement button.

  • A Closing Disclosure will display the earnest money in the Summary of Transactions: Section L. Paid Already by or on Behalf of Borrowers at Closing. 
  • The 2010 HUD and HUD will display the earnest money on line 201 as Deposit or Earnest Money and on line 501 as Excess deposit.

Third-Party Holding Earnest Money

A third-party such as the buyer’s attorney holds the earnest money and brings it to the settlement agent or title company at the time of closing.

File/New Loans

  • Enter the total Earnest Money amount. This will display on the settlement reports.
    • When saving or navigating away from the New Loans panel, a pop-up message will notify the user that updates will occur due to changes made.
      • Click OK.
    • A Commissions pop-up message will display when the earnest money exceeds the commission amount.
      • Select Transfer to Settlement Agent.
      • Click OK.

Settlement/Deposits, Debits, Credits/Deposit or Earnest Money

  • Select the third-party partner type from the Partner dropdown menu. 
    • If the partner was previously added to the file, the partner can be selected in the dropdown menu.
    • If the partner is not on the file, select Add Partner to add the partner to the file.
  • Select Earnest from the Group dropdown menu.
  • The Total auto-populates the amount from the Earnest Money field on the New Loans panel.
  • The Deposit Transfer to Settlement Agent is auto-checked and populates with the full amount of the earnest money.

Settlement/Postings

  • In the Receipts area, verify that the amount expected from the third-party partner is the anticipated earnest money amount.

Settlement/Reports

The settlement statements and closing statements are generated from this panel.

  • In the Settlement Statement area, set the Figures option to Borrower/Seller, Borrower, or Seller, then click the CD button to generate the settlement statement.

Note: The name of the CD button will change depending on the file type. CD files will have a CD button, 2010 HUD and HUD files have a HUD button, and commercial files will have a Commercial Statement button.

  • A Closing Disclosure will display the earnest money in the Summary of Transactions: Section L. Paid Already by or on Behalf of Borrowers at Closing. 
  • The 2010 HUD/ HUD will display the earnest money deposit on line 201 with a notation on line 506 for the earnest money held by the third-party and line 507 as Disbursed as Proceeds with the amount displayed (out of column).

Buyer Paying Commission (2010 HUD and HUD Files)

The buyer is paying the commission or a portion of the commission. The agent will withhold the entire earnest money from the commission. The commission is more than the earnest money. The agent will receive a disbursement for the difference.

File/New Loans

  • Enter the total Earnest Money amount. This will display on the settlement reports.
    • When saving or navigating away from the New Loans panel, a pop-up message will notify the user that updates will occur due to changes made.
      • Click OK.
    • A Commissions pop-up message will display when the earnest money exceeds the commission amount.
      • Select Retained by Earnest Money Partner.
      • Click OK.

Settlement/Commissions/Commission Listing

  • Select the listing agent partner type from the Partner dropdown menu.
  • Select Earnest from the Group dropdown menu. (Earnest will combine the line with other lines also set to the Earnest group).
  • Enter the Total manually.
    • Or enter the Percent of Sales Price, if enabled, to automatically calculate commission based on the sales price.

NOTE: Total Listing, Total Selling, and Total display the totals for all listing and selling commissions.

Settlement/Commissions/Commission Paid as Settlement (Line 703)

The Side on the Commission Listing and Commission Selling lines on the 2010 HUD and HUD is set to Seller Debit and locked. When the buyer is paying for the commissions, the side and allocation are edited from the Commission paid at Settlement line.

  • If the buyer is paying the entire commission, then select Buyer Debit from the Side dropdown menu. This will allocate all the commissions paid at settlement to the buyer.
  • If the buyer is paying a portion of the commission, then check Allocate to distribute the amount between the buyer and seller. Enter the amounts as needed in the four allocation fields that appear. The total of the four fields cannot exceed the total amount. When allocating the amount, the Side will automatically change to Split Debit.

Settlement/Deposits, Debits, Credits/Deposit or Earnest Money

  • Select the listing agent partner type from the Partner dropdown menu. 
    • If the listing agent was previously added to the file, the partner can be selected from the dropdown menu.
    • If the listing agent is not on the file, select Add Partner to add the partner to the file.
  • Select Earnest from the Group dropdown menu.
  • The Total auto-populates the amount from the Earnest Money field on the New Loans panel.

Settlement/Postings

  • In the Disbursements area, verify that the amount expected to be payable to the listing agent is the anticipated commission amount less the earnest money.
  • Verify that the amount expected to be payable to the selling agent is the correct amount.

NOTE: Double-click on the disbursement in the grid to display the details of the disbursement, including the settlement lines that make up the disbursement.

Settlement/Reports

The settlement statements and closing statements are generated from this panel.

  • In the Settlement Statement area, set the Figures option to Borrower/Seller, Borrower, or Seller, then click the HUD button to generate the settlement statement.

NOTE: The name of the button will change depending on the file type. CD files will have a CD button, 2010 and HUD files have a HUD button, and commercial files will have a Commercial Statement button.

  • The 2010 HUD will display the earnest money deposit on line 201 and on line 506 as Earnest Money held by the agent.
  • The 2010 HUD will display the total commissions in the description on line 700, the listing agent’s amount will display out of column on line 701, the selling agent’s amount will display out of column on line 702, and the total net commission allocations will display in the borrower/seller columns on line 703. A note will be displayed on line 704 indicating the amount that the listing agent retained for earnest money as a POC item.
  • The HUD will display the listing agent commission amount out of column on line 701, the selling agent commission amount out of column on line 702, and the total commission allocations in borrower/seller columns on line 703. A note will be displayed on line 704 indicating the amount that the listing agent retained for earnest money as a POC item.

Posting Earnest Money

Settlement/Posting

  • Select the settlement ledger from the dropdown menu.
    • When a dropdown menu is available the ledger being used on the file can be changed. If the ledger is listed in plain text, the user does not have access to change the currently-selected ledger.
  • In the Receipts area, select the expected receipt for the earnest money and click Post or Claim Wire/Post. The Receive Receipt panel will open for the user to enter the details for the receipt.
  • Received auto-populates with the current date and can be changed if necessary.
  • The Amount auto-populates with the amount of the expected receipt.

NOTE: If an alternate amount is entered into the Amount field, Resware will automatically create entries to offset the difference.

  • Select the Method of receipt from the dropdown menu.
  • If Check is selected, then:
  • Enter the Check #.
  • Select a supporting document from the Supporting Documents dropdown menu.
  • In the Check Information area, select the Check Type from the dropdown menu.
  • If Wire is selected, then:
  • Either claim wire from fund claims or enter wire details as needed.
  • Click Save.

NOTE: When saving, if an alternate amount is entered into the Amount field, a pop-up message will notify the user that the amount entered does not match the expected amount. Click Yes, and the offsetting transaction will be created.

  • In the Receipts area, verify that the earnest money receipt is set to Received, the Received By column has the name of the user, and the Received Date and the Method match the selections made on the Receive Receipt panel.

NOTE: Once an item has been posted, the settlement lines used to create the receipt can no longer be modified. Users with the internal user role for Settlement: Move Posting To Transactions After Close have the ability to unlock the settlement lines by clicking Move to T.A.C. Refer to the Move a Disbursement to TAC or Move a Receipt to TAC job aids for additional information.

Generate a Receipt

Settlement/Posting

  • In the Receipts area, click Receipt Report.
  • Select the desired receipt from the grid.
  • Click Generate.
  • To print the Funds Receipt, click the Print icon.
  • Select the Name of the printer.
  • Click OK.
  • Click Attach PDF to save an un-signed copy of the Funds Receipt document to the file.
  • Click OK.
Updated on April 12, 2022

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