Definition
A deposit made by the buyer as evidence of good faith intent to complete the purchase, typically synonymous with earnest money deposit in residential real estate transactions.
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The good faith deposit demonstrates the buyer's commitment and financial capacity to close the transaction. In most residential transactions, the terms 'good faith deposit' and 'earnest money deposit' are used interchangeably. The deposit is held in escrow and provides the seller with assurance that the buyer is serious about the purchase.
Pro Tip
Ensure your good faith deposit is held by a licensed escrow agent to protect the funds.
Example
The buyer provided a $15,000 good faith deposit to demonstrate serious intent.