Earnest Money
A deposit made when purchasing real estate to show the buyer is serious. In divorce, earnest money on a marital home purchase may be considered a marital asset subject to division.
Understanding Earnest Money
Earnest money becomes relevant in divorce when the couple was in the process of buying or selling property. If marital funds were used for the deposit, it is generally a marital asset. If one spouse used separate funds, they may argue for reimbursement. When selling the marital home during divorce, earnest money received from buyers is held in escrow and distributed according to the divorce settlement or court order. Disputes can arise when one spouse wants to sell and the other wants to keep the home.
Real-World Examples
The couple used $20,000 from their joint savings as earnest money on a house; when the divorce filing cancels the purchase, the refunded deposit is divided equally.
Related Terms
Any property or item of value owned by either or both spouses that is subject to division in a divorce. Assets include real estate, bank accounts, investments, retirement funds, businesses, and personal property.
Community PropertyA property division system used in nine states where all assets and debts acquired during the marriage are owned equally (50/50) by both spouses.
Equitable DistributionA property division system used by most states where marital assets and debts are divided fairly, though not necessarily equally, based on multiple factors.
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This definition is provided for educational purposes only and does not constitute legal advice. Divorce laws and terminology may vary by state and jurisdiction.
Always consult a licensed attorney in your area for advice specific to your situation.