Application Receipt Agreement-land contracts,
What is an Application Receipt Agreement
An application receipt agreement is a legal document stating that a sum of money which consists of part of a non refundable application fee as well as earnest money or reservation money of a certain sum is received in exchange for the property to be reserved. Incase the application is approved, the property is accepted as per the terms and the funds are then applied towards the move-in costs or towards the down payment incase there is a purchase agreement.
As per the Application Receipt Agreement the management processes applications in a timely fashion and they notify the applicant by either fax, mail or telephone. Incase the applicant does not want to occupy or buy the property in the future or if they do not give the information which is needed in order to process the application or even if they do not pay the amount for move-in and they occupy the property, the entire deposit amount are forfeited as they are considered as liquidated damages as in their stead other prospective purchasers would have been turned away and now the management would need to readvertise the property.
If the application is denied or even if the applicant cannot get secure financing, then the deposit fee as well as reservation amount is refunded except for the out of pocket expenses like the fees for the surveys, inspections or appraisals, credit reports or other fees which are needed for processing. However, whatever repairs and improvement are done to the property, the management will not be responsible for it.
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