Deposit with LOI

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October 21, 2023

by a searcher from Dartmouth College - Tuck School of Business at Dartmouth in Princeton, NJ, USA

Completely understand that deposit with LOI is atypcial. But in situations with deposits, who typically holds the deposit? Imagine Buyer could push to have Buyer's attorney hold the deposit instead of making deposit with an unknown broker.

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Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA
Not atypical -- depending on the buyer profile. Atypical for a strategic or a PEG with a portfolio of companies and a track record. Very typical for an individual buyer or small company buyer. Often held by the broker in a trust account, but if the buyer is not comfortable with that, it would be with the seller's attorney or title/escrow company after that. And if a buyer is trying to convey seriousness and financial ability, even if fully refundable during due diligence, it will set you apart in a crowded buyer field.
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Reply by a searcher
from University of Colorado at Boulder in Denver, CO, USA
I just sold - we had the closing agent (3rd party attorney) hold the escrow money. I had a previous buyer who wasn't serious and playing around - wasted 3 stressful month's of my like with his no deposit LOI. Escrow to me, means that the buyer is serious (and it's refundable so what's the risk anyways...?)
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