Earnest Money

What earnest money is

Earnest money (often called the EMD, or escrow deposit) is money a buyer puts down after signing a contract to show they are serious. It is held by a neutral party, usually the title company or closing attorney, until closing. At closing it is credited toward the buyer's side. If the deal ends, the contract decides who gets it.

On investor files there are usually two separate deposits:

Deposit	Who pays	Paid to	Typical size	Typical refund terms
Client's deposit on the seller contract	The client (buyer entity)	Title	Small, often a few hundred to a few thousand USD, per the contract	Usually refundable during the inspection period, per the contract
End buyer's deposit on the assignment or B to C contract	The end buyer	Title	Often larger, for example 5K to 10K or more, per the assignment	Often non-refundable once signed, per the assignment

Retail Partnership files usually have one deposit from the retail buyer, paid under a standard retail contract. Client purchase files have one deposit from the client.

The rules that never change

1. The contract sets the deadline. Read it exactly: "within 3 business days of the effective date" is not the same as "within 3 days." Business days usually exclude weekends and federal holidays.
2. The holder is neutral. Title releases a deposit only as the contract allows, usually when both parties sign a release or at closing.
3. A receipt or it did not happen. "I sent it" is not proof. The receipt from the holder is proof.
4. Late can be fatal. In many contracts, if the buyer's deposit is late, the seller may cancel. Protect the client's deposit deadline like a closing date.
5. State rules can apply. Some states have rules on where wholesale deposits are held and when they must be returned to a seller after a cancellation for missing disclosures. Follow the client's instructions and title's guidance.

Tracking every deposit

For every deposit, the tracker holds these fields:

Field	Example
Deposit type	Client deposit on seller contract
Amount	(DEPOSIT AMOUNT)
Payer	(BUYER ENTITY NAME)
Holder	(TITLE COMPANY)
Deadline	(DEPOSIT DEADLINE)
Method	Wire, cashier's check, or title's secure payment link
Sent date	Date the payer confirmed sending
Receipt date	Date title confirmed receipt
Receipt file	Link to the receipt in the shared drive
Refundable until	(INSPECTION PERIOD END)

Deposit timeline

When	You do
Day 0	Log the deposit, confirm the method with title, send the payer the instructions through the approved method
The day before the deadline	Confirm with the payer that it was sent, or will be sent today
The deadline day, morning	Ask title to confirm receipt
Receipt confirmed	Save the receipt, update the tracker, call the seller with the good news
Deadline passes with no receipt	Red escalation to the client and team lead within 15 minutes

Delivery methods

Method	Notes
Wire transfer	Fastest. Wiring instructions must come from title and be verified by phone with a known number before any money is sent.
Title's secure payment link	Many title companies offer one. Use only the link from title's official channel, confirmed by phone.
Cashier's check	Delivered or couriered to title. Slower. Ask title to confirm the day it arrives.

When the deposit is late

The client's deposit is late

1. Call the client the moment you see it has not been sent. Ask for the payment confirmation or the expected time.
2. Tell title it is coming and when.
3. If the deadline will be missed, ask the client whether to request a short written extension from the seller (an addendum or the state form). Never ask the seller yourself without client approval.
4. Record every step with times in the CRM.

The end buyer's deposit is late

1. Email and call the buyer: "Our records show your deposit for (PROPERTY ADDRESS) was due today. Can you send the wire confirmation?"
2. Tell dispositions and the client the same hour.
3. The client decides: give the buyer a short extension in writing, or move to the backup buyer. Dispositions handles the buyer conversation about replacing them.
4. Do not move the file forward with a buyer who has not deposited.

Release of earnest money

A deposit is released in one of three ways:

1. At closing. It is credited on the settlement statement to the party who paid it. Check this on every statement (page 06).
2. By mutual release. Both parties sign a release that tells the holder who receives the deposit. Many states have a standard release form (page 08). Brokers sign too when the contract involves them.
3. By the contract's dispute process or a court order. If the parties disagree, title holds the money. Title will not pick a side.

Release checklist

• The client has decided in writing that the contract is ending and who should receive the deposit.
• The right cancellation notice was delivered first, if the contract requires one (page 08).
• The release names the right contract date, property, parties, deposit amount and recipient.
• Every party who signed the contract signs the release, plus brokers where required.
• Title receives the fully signed release and confirms when funds will be sent.
• The CRM shows the release date, amount and recipient.

When a seller cancels inside a legal cancellation window

Some states give sellers in wholesale contracts the right to cancel within a set period, and require deposits to be returned or released quickly. If a seller tells you they want to cancel during that window:

1. Thank them and confirm you understood their request.
2. Do not argue, delay or try to change their mind.
3. Escalate Red to the client right away, with the exact time the seller told you.
4. Follow the client's and title's instructions for the cancellation and the deposit.

Check yourself

1. Name the two deposits on a typical assignment file and who pays each.
2. What counts as proof that a deposit arrived?
3. An email arrives from the title company's address with new wiring instructions. What do you do?
4. The buyer and seller disagree about who gets the deposit. What does title do?
5. A seller calls on the second day after signing and says they want to cancel under the state's cancellation right. What are your four steps?

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