Legal Question in Real Estate Law in Massachusetts

Re: Deposit Money Interest Earned

You will need to review the purchase and sale agreement to determine whether or not the funds were to be held in an interest bearing account and if so, who is entitled to the interest. As a general rule, deposits which are held for a short period of time are held in non-interest bearing accounts. However, the P & S should answer the question as to what type of account the deposit will be held in.

Re: Deposit Money Interest Earned

It depends on what your Purchase and Sale Agreement and Construction Agreement (if one is signed as well) says with respect to the deposit. Most large builders (Toll Bros for instance) put provisions in that specifically state the buyer is not entitled to interest on the deposit. You should review the agreement or have an attorney review the agreement for you.

If the deposit is for a short period of time most Buyers and Sellers do not even bother to put the money in an interest account. 1% annual interest is a little more than $50 per month and the bookkeeping and 1099 reporting would cost the escrow agent (whether a Broker or Seller or Title Company)at least $25 just in time for the paperwork.