EMD Funding for Multifamily and Commercial Deals

Why do larger deals create a deposit problem?

Bigger contracts mean bigger deposits, and on multifamily and commercial deals the money often has to be in escrow at the same moment you are paying for inspections, third-party reports, legal review and lender deposits. If you are raising equity from partners, the deposit may be due before the raise is finished.

Axelrad's EMD funding page speaks to that directly, listing developers who need to "secure deposits while syndicating capital" among the investors it serves, and stating no maximum deposit size. Size is not the limiting factor: Axelrad can fund EMDs in the millions on large commercial portfolio deals.

How are commercial deposits usually structured?

Commercial and multifamily contracts are negotiated, so there is no single form. In our experience, these features are common:

• A due diligence period. A set window to inspect, review leases and financials, and cancel.
• An initial deposit, due shortly after signing and refundable during due diligence.
• An additional deposit, sometimes due when due diligence ends, which may be non-refundable from that point.
• A hard date. The point after which the deposit, or part of it, is no longer refundable except for seller default.

Read your contract for each of these. They decide whether, and for how long, a deposit can be funded.

What EMD funding can and cannot cover on a larger deal

The rule underneath every row is the same one Axelrad applies on a single-family deal: fully refundable deposits only.

What does it cost, and what if you walk away?

At Axelrad the fee is paid up front and can be flat or a percentage of the deal; typically it is a percentage, with a $500 minimum. You see the fee before you sign. If you cancel inside your contingencies, nothing more is owed: the refunded deposit comes back to Axelrad, and there is no failure or non-performance fee.

If you plan to assign the contract, for example to a single-purpose entity or a partner group, a funded EMD can stay on the deal, but the new parties must also sign for the EMD so it remains assignable.

How do you plan the timeline?

1. Map every deposit date and every contingency deadline from the contract onto one calendar.
2. Note which dollars are refundable and until when.
3. Request EMD funding for the refundable portion with time to spare before the deposit deadline.
4. Plan how any non-refundable deposit will be covered, usually from your equity raise or your own funds.
5. Line up purchase financing early. For multifamily and commercial, start the commercial lending or bridge loan conversation alongside the deposit.

A worked example

Example only, with hypothetical round numbers. You are under contract on a $2,000,000 apartment building. The contract calls for a $40,000 initial deposit within three business days, refundable through a 30-day due diligence period, and a $20,000 additional deposit at the end of due diligence that is non-refundable.

• The $40,000 initial deposit is refundable, so it can be EMD funded, with the fee shown before you sign and paid up front.
• If you cancel inside the 30 days, the deposit comes back out of escrow to Axelrad, and nothing more is owed.
• The $20,000 additional deposit goes hard when it is posted, so plan to fund it from your own capital or your raise.
• At closing, the funded deposit is credited to the purchase and the EMD funding is repaid.

The same structure scales up. On a large commercial portfolio contract with a refundable deposit in the millions, the process and the refundability rule are the same.

What does the lender need?

Axelrad's published list for EMD funding is short: an executed contract, a fully refundable deposit and the title company's wire instructions. The EMD page also suggests preparing the deposit amount and due date, refundability and contingency deadlines, the title or escrow contact and your planned closing. On a larger deal, also send the deposit schedule so the team can see every date at once, and say whether you plan to assign the contract.

What if closing gets pushed?

Larger deals slip more often than house deals: a lender's third-party reports run late, a lease audit turns up questions, or a partner needs another week. If an extension makes the deposit hard, or adds a new non-refundable deposit, that changes the picture. Call your funder before you sign the extension, not after, so the team can tell you how it affects the funded deposit.

Key takeaways

• Axelrad can fund any volume and size of EMDs on single-family, multifamily, commercial and land deals, including EMDs in the millions on large commercial portfolio deals.
• Only the fully refundable portion of a deposit can be funded.
• The fee is paid up front: flat or a percentage of the deal, typically a percentage, $500 minimum.
• If you cancel inside contingencies, nothing more is owed and there is no failure fee.
• Staged deposits and hard dates are common on larger contracts; map them before requesting funding.
• Start purchase financing early on multifamily and commercial deals.

Under contract on a larger property?

Send the contract and deposit schedule through the Axelrad application, and the team will confirm which part of the deposit can be funded. See the EMD funding page for current terms.