When is the earnest money required to be delivered to the title company in a Short Sale?

In the context of a Short Sale, earnest money plays a critical role in establishing the buyer's commitment to the transaction. The requirement to deliver earnest money to the title company is crucial for several reasons, including ensuring that funds are secured during the negotiation and approval process with the lender.

The correct answer specifies that the earnest money must be delivered on the second business day after the original effective date of the contract. This timeline provides sufficient opportunity for the involved parties to complete any necessary verbal agreements, clarifications, or additional negotiations related to the transaction before the funds are officially handed over. In a Short Sale scenario, where approvals from lenders can be complex and time-consuming, this timing helps keep the process organized, allowing all parties to move forward without undue delay.

Understanding the importance of this timeline emphasizes the importance of having all necessary documents and funds arranged promptly, ensuring that the sale proceeds smoothly while awaiting lender approval.