Good Faith Money

The day we’ve been waiting for has finally arrived: our friend Lars has decided to sell his Zeppelin NT, and we’re going to buy it. That’s right, y’all: we’re buying a blimp. Vacations will never be the same again. And even better, he’s willing to part with it for the low, low price of eight million dollars, which is a steal no matter how we slice it.

Of course, we don’t just randomly have eight mil on hand, so we’ll only be able to give him a portion of it right away. And Lars, who thinks we’re kind of flaky anyway, has his doubts about whether we’ll actually purchase the thing. But we know we will, so we offer him some good faith money: money put toward the purchase of something as a way of promising we’re really, truly going to buy it.

In this case, we give Lars 10% of the full purchase price, and we agree that if we end up purchasing the blimp (which we so will), that money will count against what we owe. If we decide to back out within 60 days, we get the good faith money back; if we back out after that, Lars gets to keep it.

This is like paying earnest money when we’re trying to buy a house. We might pay five percent of the total list price as a promise we’ll buy the house; if we change our minds or something goes haywire within a certain period of time, we’ll usually get the money back. Sometimes we don’t get it back, though, which is why it’s helpful to become acquainted with our state’s laws on good faith payments before we start making any.