Earnest Money Promissory Note

EARNEST MONEY PROMISSORY NOTE

FOR

$[ENTER AMOUNT]

This Earnest Money Promissory Note (the "Note") is made effective as of [Enter Date] by and between:

[Enter Names  and Addresses of all sellers of the property] (the "Seller"),

AND

[Enter Names  and Addresses of all buyers of the property] ( the "Buyer"),

RECITALS

A.    The Seller wishes to sell the property at [Enter Address of Property] [Enter Parcel Number/APN] (hereinafter referred to as "the Property") and the Buyer wishes to purchase the Property (the “Agreement”)

B.    The Buyer and Seller have agreed a total sales price of the Property of $[Enter Amount] (the “Sales Price”);

C.    The Buyer wishes to show its good faith in agreeing to purchase the Property by providing  earnest money to secure the Agreement and as partial payment of the above total sales price; and

THEREFORE, in consideration of the premises and mutual covenants herein, the parties hereto agree as follows:

1. FOR VALUE RECEIVED the Buyer does hereby PROMISE TO PAY to the Seller, the principal amount in lawful money of the United States of America of $[Enter Amount in numbers] (the “Earnest Money”)

2. The Earnest Money shall be paid to the Buyer at [Enter Address or name of agent and address] and by cheque/credit/cash [delete as applicable] [Optional]

3. The Earnest Money shall be be paid [Choose one of the following]

(a)  Immediately

(b)  On or before [Enter time] on [Enter Date]

(c)  Within [Enter figure] days/hours following the execution of the Sale and Purchase Agreement.

(d)  Within [Enter figure] days/hours after [Enter any other condition e.g. loan approval]

(e)  Other - SPECIFY

However nothing in this clause shall limit the ability of the Buyer to make payment of the Earnest Money prior to such time aforesaid.

4. For the avoidance of doubt this note is given as earnest money in connection with the [proposed] Sales and Purchase Agreement dated [Enter date of Agreement if signed and if not delete and include the word proposed above] between the Buyer and the Seller in relation to the Property.

5.  Where the proposed sale and purchase of the Property is completed the Seller shall retain the Earnest Money and shall deduct the amount of the Earnest Money from the Sales Price.

6. Where the Buyer defaults under the Agreement [and this is not rectified in [enter time] days/hours/weeks] and there is no default of the Seller and good title to the Property is proven or where there is a defect in title such defect is rectified within [Enter Time Frame] days/weeks the Earnest Money will be forfeited to the Seller. A default under this Note shall also constitute a default under the Agreement. The Parties agree that the following shall be deemed to be a default by the Buyer:

(a)  Optional

(b)  Optional etc etc

7. {OPTIONAL}The following shall not be deemed to be a default by the buyer:

(a)  the Buyer does not secure financing;

(b)  or the property does not pass a qualified structural inspection;

(c)  ETC.

7. In the case of default by the Buyer prior to the payment of the Earnest Money in line with paragraph 3 the Seller shall demand payment of the Earnest Money, such payment to be made within [Enter Time] days/weeks/months. In the event the Buyer does make such payment within such time interest at [Enter %] per annum shall apply to the Earnest Money.

8. If the Agreement is terminated for any reason other than breach by Buyer, the Earnest Money, will be returned to the Buyer.

9. Should the Seller employ legal counsel to enforce or interpret any provision of this Note, whether or not a suit is instituted, Buyer agrees to pay costs and reasonable attorney fees, in addition to any other remedy. The obligations and remedies provided under this Note are not exclusive and supplement any provided in the Agreement.

9. ENTIRE AGREEMENT. The provisions herein contained constitute the entire agreement between the parties hereto and supersede all previous communication, representations, expectations, understandings and agreements whether verbal or written between the parties or their respective representatives with respect to the subject matter of this Agreement and shall not be modified or amended except by written agreement signed by the parties to be bound thereby.

10. NO WAIVER. No provision of this Agreement shall be amended, altered or waived except by a further written agreement, signed by each of the parties hereto.  No waiver of any provision hereof shall operate as a waiver of any other provision or as a waiver of the same provision on any other occasion.

11. SEVERABILITY. Should any part of this Agreement be declared or held invalid for any reason, that invalidity shall not affect the validity of the remainder which shall continue in force and effect and be construed as if this Agreement had been executed without the invalid portion and it is hereby declared the intention of the parties hereto that this Agreement would have been executed without reference to any portion which may, for any reason, be hereafter declared or held invalid.

12. SUCCESSORS AND ASSIGNS.  This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

13. TIME OF ESSENCE.  Time shall be of the essence of this Agreement.

14. GOVERNING LAW. The provisions of this Agreement shall be governed by and interpreted in accordance with the laws of the county of [Enter County] and the State of California.

[SIGNATURE PAGE FOLLOWS]

This Earnest Money Promissory Note is signed by the Buyer and is accepted by the Seller parties and shall be effective as of the date first above written.

BUYER:

By: ___________________________________________________

By: ___________________________________________________

SELLER:

By: ___________________________________________________

By: ___________________________________________________