Sellers: Don’t give away your right to collect earnest money

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DEAR BENNY: Some states such as California have a 3 percent limit to deposit recovery; buyers have the right, if they legally back out of a contract, to secure a full return of up to a 3 percent deposit. Any deposit over 3 percent is not refundable. In California, I have never seen a deposit over 3 percent. --Joe DEAR JOE: I am not a California attorney, but I did a Web search on the issue of the earnest money deposit when you sign a contract to purchase a house or a condo. I am not sure you are correct. While you are right that most deposits in California do not exceed 3 percent of the purchase price, it's not based on any legal requirement. Apparently, sellers sign a provision that they will be limited to 3 percent of the purchase price in the event the buyer defaults. Accordingly, the earnest money deposit rarely exceeds that amount. If I am a seller, I want more than 3 percent should my buyer default. If there is a default, I have to start all over again marketing the ho...