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In most real estate transactions the seller will require that the buyer deposit earnest money. This money demonstrates good faith by the buyer to purchase the property from the seller, although most have no idea what role the earnest money plays in the transaction. The purpose of the earnest money is to provide the seller with compensation in the event that the buyer backs out, with the earnest money being held in escrow during the contract period. 

Throughout the contract and closing process there are many deadlines to meet, and each party has obligations to fulfill along the way. So if something goes wrong, who keeps the earnest money?

The contract outlines when and who the earnest money will or should go to when an obligation is not met. There are times the seller and buyer won’t agree on who gets the money if the real estate transaction falls through.

When the time comes to figure out who keeps the earnest money when a transaction falls through, it usually boils down to who violated the terms of the contract. If a buyer defaults on a commitment or time frame, they will lose their money. However, if the buyer backs out due to a met contingency, the seller will not be able to keep the earnest money. All parties should be clear on the ins and outs of the terms of the contract and how it affects the earnest money deposit.


At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

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