THE BIG PICTURE
How the deposit works—and why the contract language matters.
Negotiate the amount
A deposit is not automatically a fixed percentage of the price. The parties can negotiate the amount and timing.
Know where the funds go
The contract should identify who receives or holds the deposit and when it must be delivered.
Understand the closing credit
If the purchase closes, the funds are typically accounted for on the closing statement, subject to the transaction documents.
Do not assume it is refundable
Whether earnest money is returned, forfeited, or disputed depends on the written agreement, the facts, and any applicable law.
Watch deadlines carefully
Inspection notices, financing terms, and other contingencies can affect your rights. Keep the signed documents and written communications organized.
Questions worth asking
- Who holds the deposit and what is the exact due date?
- What does the contract say if the deal falls apart?
- What written notice is required to exercise a contingency?
This educational resource is general information, not legal, tax, or lending advice. Specific rights, obligations, costs, and deadlines depend on your documents and circumstances. Confirm current rules with qualified professionals and official sources.