Good Faith Money

Good Faith Money

The deposit of money into an account by a buyer to show that they have the intention of completing the deal. In most cases, the deposit amount will be a percent of the amount owed.

The money in an account can also be known as "margin" or a "performance bond", depending on the type of transaction.

Notes:

An example would be a homebuyer depositing money into an escrow account. When this is done the seller of the home knows that they buyer will fulfill the terms of the contract and make the purchase.

See also: Escrow, Futures Contract, Margin, Performance Bond