Writing an Earnest Money Deposit Check Off A Friend’s Checking Account?

August 14th, 2014


I have seen a few buyers be in a pinch for one reason or another, and not have immediate access to their checkbook. As a result, when writing an earnest money deposit as part of a real estate contract, they use any source they can find. They may use a friend or a parent. They figure they’ll pay them back later. However, that can create a problem or at the very least more paperwork.

If you use someone else’s check as your earnest money deposit for a sales contract, you’ll need to document at least the following:

  • A copy of the initial earnest money deposit check from your alternative source.
  • Evidence that the check cleared the original account.
  • The ability to show the check you write to repay the alternative source you used.
  • The ability to show this check clearing your account, with a copy of a bank statement to prove the check cleared.
  • An explanation letter explaining all of this mess.

Wouldn’t it be easier to be prepared and use your own checkbook. Then you only provide the lender:

  • A copy of the initial earnest money deposit check.
  • Evidence the check cleared your account.

The bottom line is if you are looking to buy real estate, be prepared. Don’t write an earnest money deposit off of a friend’s bank account, a parent’s bank account, or a cash advance on a credit card. Don’t even use a business account of yours that you figure on paying back from your personal account. It creates a paperwork nightmare!

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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