Earnest money is a critical part of most real estate transactions in Florida. It shows that a buyer is serious about purchasing a property—but what happens if the deal doesn’t go through?
Understanding how earnest money works can help buyers and sellers avoid disputes and protect their financial interests.
What Is Earnest Money?
Earnest money is a deposit made by the buyer and held in escrow during the transaction. It is typically managed through a title and escrow company.
The funds are applied toward the purchase price at closing—but only if the deal is completed.
When Does the Buyer Get the Deposit Back?
Buyers may be entitled to a refund if the contract includes contingencies such as:
- Financing contingency
- Inspection contingency
- Appraisal contingency
If these conditions are not met, the buyer may cancel the contract and recover the deposit.
A real estate transaction attorney can help ensure these protections are properly written into the contract.
When Does the Seller Keep the Deposit?
If a buyer breaches the contract without a valid reason, the seller may be entitled to keep the earnest money.
This is where disputes often arise.
What Happens in a Dispute?
When there is disagreement over who is entitled to the deposit, the escrow agent may hold the funds until both parties agree—or until a legal resolution is reached.
A real estate litigation attorney may be needed to resolve the issue.
How to Avoid Earnest Money Disputes
- Clearly define contingencies
- Meet all deadlines
- Communicate any issues early
- Work with a real estate closing attorney
Final Thoughts
Earnest money can quickly become a point of conflict if a deal falls apart. Having the right legal guidance ensures your interests are protected from the start.
