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Glossary · Closing & Contracts

Earnest Money Deposit

The good-faith deposit that anchors a Florida contract, and the rules for when it's truly at risk.

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Quick definition
The earnest money deposit (EMD) is the buyer's good-faith deposit made shortly after contract acceptance, held in escrow by a title company, attorney, or broker — never handed to the seller. Amounts are negotiable (commonly 1–3% of price in Florida practice; new-construction builders often require more). The contract's contingencies — inspection period, financing, appraisal — define exactly when the buyer can recover it.

Where it's held

Florida deposits go to an escrow agent named in the contract — usually the closing title company or an attorney's trust account, sometimes the listing broker's escrow account. Escrow agents are regulated and cannot release a disputed deposit without agreement or a legal process; a seller never simply 'takes' the deposit unilaterally.

When the buyer gets it back

Cancellation within the inspection period (under the AS-IS form), a properly exercised financing contingency, or a failed appraisal contingency each entitle the buyer to a refund. Deadlines are strict: rights exercised a day late are rights lost.

When the seller can claim it

If the buyer defaults — walks away with no live contingency — the FAR/BAR contracts typically make the deposit the seller's liquidated damages. Disputes go to the escrow dispute process; neither party should expect quick access to contested funds.

Common questions.

How much earnest money is normal in Florida?
It's negotiable. Resale practice commonly runs 1–3% of the purchase price; new-construction builders frequently require larger, sometimes non-refundable, deposits under their own contracts.
Who holds the earnest money deposit?
A neutral escrow agent named in the contract — typically the title company or an attorney's trust account. Never the seller directly.
Can I lose my deposit if my loan is denied?
If the contract has a properly drafted financing contingency and you meet its deadlines and application obligations, a genuine loan denial within the contingency generally returns the deposit. Missing the contingency's deadlines is how buyers with denied loans still lose deposits.
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