Good Faith Money

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DEFINITION of 'Good Faith Money'

The deposit of money into an account by a buyer to show that he or she has the intention of completing the deal. In most cases, the deposit amount will be a percent of the amount owed.

The money in an account can also be known as "margin" or a "performance bond", depending on the type of transaction.

INVESTOPEDIA EXPLAINS 'Good Faith Money'

An example would be a homebuyer depositing money into an escrow account. When this is done, the seller of the home knows that the buyer will fulfill the terms of the contract and make the purchase.

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