binder

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Binder

An amount of money paid to indicate good faith in a transaction before the transaction is completed.

Earnest Money

A small amount of money that a seller requires a potential buyer to deposit before a transaction is completed. Earnest money ensures that the potential buyer is serious about the transaction and will be likely to complete it when the time comes. If the buyer subsequently withdraws from the deal, he/she usually forfeits the earnest money. It is common in real estate and securities (where it is usually called a good faith deposit). Earnest money reduces the risk to the seller. It is also called a binder.

binder

(1) Money given as earnest money for an oral contract to purchase real estate, to bind the parties until such time as they can complete the necessary written contract. (2) A written instrument giving immediate casualty coverage for property, even though the insured may not have paid a premium or received a policy.(3) A temporary contract of title insurance in which the insurer agrees to issue a final policy if certain exceptions, such as prior mortgage liens, are removed at or before closing.