Between the day a seller accepts your offer and the day you get the keys, your earnest money deposit is the most exposed money in the deal. Buyers often write the check without knowing who is holding it, how fast it must be delivered, or what the contract says happens to it if the sale falls apart. This guide explains how the deposit works in a Florida purchase, who holds it, when it comes back to you, and what happens when buyer and seller disagree.
This article is general education, not legal advice. Your signed contract and a Florida real estate attorney or title company decide your specific case.
What an earnest money deposit is
An earnest money deposit is money you put down to show you are serious about buying. In Florida, it is not paid to the seller. It is held in escrow, meaning a neutral third party holds it until closing, when it is typically credited toward your purchase. The standard Florida Realtors/Florida Bar “Residential Contract for Sale and Purchase” (FR/BAR) says the escrow agent who receives the deposit agrees to deposit it promptly, hold it in escrow within the State of Florida and disburse it according to the terms of the contract.
The form has a blank for the amount. Nothing in it sets a required percentage, so the deposit is whatever you and the seller agree on. In a competitive situation a larger deposit can make an offer look stronger, but a larger deposit also puts more money at risk if you miss a deadline.
Who holds your deposit
The contract names the escrow agent. Under Florida Real Estate Commission rules, when the deposit is placed with a title company or an attorney, the licensee who prepared the contract must write that company’s or attorney’s name, address and telephone number into it (Rule 61J2-14.008, Florida Administrative Code). The holder is commonly one of three:
- A title company with trust powers.
- A real estate attorney using a trust account.
- A real estate broker, holding it in the brokerage’s escrow account.
Whoever it is, check the name before you send money, and confirm wire instructions by calling a phone number you already trust. Do not rely on an email that arrives with new instructions.
The deadlines you control
The FR/BAR form asks whether the initial deposit accompanies the offer or is made within a number of days after the effective date, and if that number is left blank, the form says to use three days. That is when your clock starts, so it is wise to have funds ready before you submit the offer. The contract states that failure of funds to become “collected” does not excuse the buyer’s performance, so a check that does not clear is still your problem.
Once the money reaches a broker, the broker must put it in the escrow account “immediately,” which Rule 61J2-14.008 defines as no later than the end of the third business day after receipt. Saturdays, Sundays and legal holidays do not count as business days. An agent who receives your check must give it to the broker by the end of the next business day (Rule 61J2-14.009). If your deposit is going to a title company or attorney, the buyer’s broker must ask for written verification of receipt within ten business days after the deposit was due.
Ask for a written receipt in every case. It protects you if a deadline is later questioned.
When you get your deposit back
The contract, not the escrow agent’s opinion, decides who is entitled to the deposit. In general, a buyer who cancels properly inside a contingency period written into the contract is in a very different position from a buyer who simply walks away.
- Inspection period. If you use the inspection right and cancel in writing within the allowed time, the contract provides for the deposit to be returned. Our guide to the Florida “As Is” contract and your inspection period explains how that cancellation works and why the deadline is strict.
- Financing contingency. If your contract has a loan approval contingency and your lender denies the loan despite your good-faith effort and timely application, you may be able to cancel within the contract terms. A late application or a purchase made without a financing contingency changes the result.
- Seller default. If the seller fails to perform, the contract gives the buyer options, including getting the deposit back.
One practical point catches buyers by surprise. Even when the contract clearly says the deposit goes back to you, many title companies will not release it until both parties sign a release and cancellation, according to Florida Realtors. That is usually the escrow agent’s own policy, not a term of your contract, and you can ask whether any other route is available.
When a buyer can lose the deposit
If the buyer fails, neglects or refuses to perform under the contract, including paying the deposit on time, the FR/BAR form lets the seller elect to retain the deposit as agreed liquidated damages. Common ways a buyer ends up in default:
- Missing the deposit deadline.
- Letting the inspection or financing contingency date pass without giving written notice, then deciding not to close.
- Failing to close on time for reasons within the buyer’s control.
Read each deadline as a calendar date, and keep notices in writing and delivered the way the contract requires. Our article on hidden costs Florida buyers overlook covers other money that can leave your account before closing.
How to protect your deposit
- Schedule your inspection right away. A licensed inspector can usually be booked within your inspection window, and the report gives you the information to negotiate or cancel in time. Our partner site explains how an FHA appraisal differs from a home inspection, which is a common source of confusion.
- Get lender timelines in writing. Apply for your loan quickly and know your loan approval date. If you are comparing loan types, this comparison of FHA mortgage insurance and conventional PMI helps you understand the monthly payment before you commit.
- Line up homeowners insurance early. Insurance availability and price can affect whether a Florida home works for you, and getting quotes during your inspection period keeps your options open. You can request a Florida property insurance quote while the contract is still cancellable.
- Calendar every date. Put the deposit, inspection, loan application, loan approval and closing dates in your phone the day the contract is signed.
- Keep every notice and receipt. Written proof is what the escrow agent and, if needed, a court will look at.
The seller side benefits too. Sellers who know how the deposit works can read an offer better, and our guide to what Florida sellers must tell buyers pairs with this one.
What happens if buyer and seller disagree
If both sides claim the deposit, the escrow agent generally cannot choose. In most cases a title company will want clear written instructions from both parties before releasing funds. If the parties cannot agree, the title company will likely interplead the funds, meaning it deposits them with the local clerk of court, and either party can then go to court to argue they are entitled to them (Florida Realtors).
If a real estate broker is holding the deposit, state rules add steps. The broker must notify the Florida Real Estate Commission in writing within 15 business days after receiving conflicting demands, and must start one of the settlement procedures in section 475.25(1)(d), Florida Statutes, within 30 business days (Rule 61J2-10.032). Those procedures include mediation, arbitration, litigation or an escrow disbursement order. FREC will not issue an escrow disbursement order for a dispute over more than $50,000. The notification rule does not apply to funds held by a title company or an attorney.
Frequently asked questions
Is earnest money refundable in Florida?
It depends on the contract. It is generally returned when the buyer cancels correctly under a contingency such as the inspection period, or when the seller defaults. A buyer who defaults may forfeit it as liquidated damages.
How much earnest money should I put down?
There is no amount set by the standard Florida form. It is negotiated. Talk to your agent about what is reasonable for your price range and market, and only deposit what you are comfortable having at risk.
How long do I have to deliver the deposit?
Follow the contract. On the FR/BAR form, if the number of days is left blank, the default is three days after the effective date.
Who can hold my deposit?
A title company, an attorney or a broker, as named in the contract. Confirm which one before you pay.
Does the deposit count toward my down payment?
Typically it is credited at closing, but confirm with your lender and closing agent, and keep the receipt for your lender’s documentation.
Sources
- Florida Realtors, Florida’s Escrow Laws & Rules (floridarealtors.org)
- Florida Realtors/Florida Bar, Residential Contract for Sale and Purchase (FloridaRealtors-FloridaBar-7)
- Florida Administrative Code Rules 61J2-14.008, 61J2-14.009, 61J2-10.032; section 475.25(1)(d), Florida Statutes
About the author: Tariq AbouAdma is a Florida real estate broker (Broker BK3375638) at Quality Real Estate Services LLC, helping buyers and sellers across Orange, Osceola and Seminole counties.
Questions about buying a home in Central Florida? Call us at 407-476-6667 or write to info@qresllc.com. Quality Real Estate Services LLC, 336 Wilshire Blvd, Suite 274-229, Casselberry, FL 32707.