| As you can see, the purchase
agreement should be a comprehensive document so that both sides understand
exactly what is expected. To be valid in Louisiana, any sale must have a
clear meeting of the minds as to the price and the thing sold, and there
must be a clear consent to the sale. |
Earnest Money Whether or not a deposit is considered
earnest money is extremely important. If the deposit is earnest money, which
the law does not presume, either
party is free to withdraw from the agreement without cause or explanation.
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Related Topics |
The other conditions that can be specified in the purchase agreement simply insure there are no misunderstandings or surprises. Remember, if a substantial misunderstanding does occur, it might give either party grounds to withdraw from the agreement. It is to your advantage to make sure the purchase agreement is clear and comprehensive. |
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Let's look at an actual Louisiana case about purchase agreements and earnest money: Roger and Aubrey signed a purchase agreement in which Roger agreed to buy Aubrey's house for $75,000. Roger gave his real estate agent $4,500 cash, which the purchase agreement stated was to be applied to the purchase price when the sale took place. After checking the title, Roger tendered the rest of the purchase price to Aubrey and asked that the sale take place. Aubrey refused to go through with the sale, and Roger sued for specific performance, asking that Aubrey be ordered to comply with the terms of the purchase agreement. Aubrey's attorney argued that since a deposit is presumed to be earnest money, Roger could only get back twice his deposit. Roger's attorney argued that the purchase agreement clearly stated that the deposit had to be applied to the purchase price and was therefore intended by the parties not to be earnest money. The trial court agreed with Roger's attorney. However, Aubrey appealed, and the Court of Appeal decided that the trial judge was wrong. This case has been superseded by new legislation that makes it clear that the law will presume a payment made towards the purchase will not be presumed to be earnest money unless the purchase agreement clearly says it is earnest money. |
Art. 2624. Deposit, earnest money A sum given by the buyer to the seller in connection with a contract to sell is regarded to be a deposit on account of the price, unless the parties have expressly provided otherwise. If the parties stipulate that a sum given by the buyer to the seller is earnest money, either party may recede from the contract, but the buyer who chooses to recede must forfeit the earnest money, and the seller who so chooses must return the earnest money plus an equal amount. When earnest money has been given and a party fails to perform for reasons other than a fortuitous event, that party will be regarded as receding from the contract. |