Q: We are buying a home in Virginia, and the real estate agent has asked us to put down almost 10 percent of the purchase price for the so-called good-faith earnest money deposit. While we reluctantly are prepared to put down that much, we have been informed that we will not receive interest on this amount. Since settlement will not take place for about three months, we don't want to lose the interest. Why can't we get interest on our deposit?

A: You certainly should be able to get interest on your earnest money deposit. Many real estate firms traditionally have been reluctant to put the deposit in interest bearing accounts. In earlier days, there were prohibitions against such accounts, for fear that real estate firms would commingle the various deposits, thereby breaching the fiduciary relationship they have with the buyer.

More recently, however, most competent real estate firms are more than happy to accommodate the purchaser and put the deposit in an interest bearing account. Before you sign a contract, ask the real estate agent about their policies. If the agent is unwilling to put your money in such an interest bearing account, have your lawyer hold the money, and your lawyer will be able to give you interest on that amount.

Alternatively, you certainly should insist the agent open up a special interest bearing account, with interest accruing to you on the date of settlement. Specific language should be added to your contract, stating:

"The earnest money deposit will be placed in an interest bearing account, and interest will accrue to purchaser if settlement takes place or if the deposit is returned to purchaser."

I don't believe that those real estate agents who are reluctant to put your money in an interest bearing account are trying to make additional money on the "float."

Rather, I suspect their reluctance stems more from the fact that there is a little extra work that has to be done when a separate account has to be set up to accommodate this special earnest money deposit.

Since you have raised the question of the earnest money, here are some additional points to consider:

How much deposit should be given? The seller wants as much as possible, and the buyer wants to give as little as possible. This is clearly a negotiable factor between buyer and seller. Certainly the buyer should put down enough money to show his or her good faith. After all, the buyer is asking the seller to take the house off the market, and the buyer should be prepared to put down some money for this consideration.

Real estate agents would like buyers to put down at least 10 percent, on the theory that if the buyer defaults, the agent will get half the deposit.

My own rule of thumb ranges between 5 and 8 percent of the full purchase price, although as indicated earlier, this is clearly negotiable.

Should you use a promissory note? If I am the seller, I am totally opposed to the use of such an instrument. A promissory note is only as good as the person standing behind it, and in the event of a default, the seller would have to file suit to collect on that note. Of course, a promissory note can be used for a few days, if the purchaser needs time to arrange for the transfer of funds to cover the down-payment.

Who should hold the deposit? If there is no real estate agency involved in the transaction, I strongly recommend that buyers do not give the deposit directly to the seller. After all, the buyer may not get financing, and will be entitled to a return of these moneys.

The seller might have already spent those funds, and the buyer may have a hard time getting them back quickly. If there is no agent involved, the deposit check should be held by the buyer's attorney, or in a joint savings account set up between the buyer and the seller.