What Is Earnest Money?

This article provides general information based primarily on the Tallahassee Board of REALTORS® Contract for Sale and Purchase, revised March 2026. Individual transactions may involve different contracts, amendments, addenda, or statutory requirements. This article is not legal advice. Consult a Florida real estate attorney regarding specific contractual rights or disputes.

When a seller accepts an offer on a home, one of the first steps for the buyer is typically submitting an earnest money deposit, sometimes called a good faith deposit.

This deposit demonstrates the buyer's commitment to purchasing the property. But where does that money go, and what happens if the sale doesn't work out?

How Does Earnest Money Work?

Earnest money is a deposit made by the buyer after entering into a purchase contract, or sometimes when submitting an offer.

Rather than going directly to the seller, the money is held by an escrow agent, typically a title company, until closing or its authorized release.

The deposit amount is completely negotiable, and is typically located on the first page of the Tallahassee Board of REALTORS® Contract for Sale and Purchase, which is where you can also find the contact information of the escrow agent holding the deposit.

When Is the Deposit Due?

Under the Tallahassee Board of REALTORS® Contract for Sale and Purchase, the initial deposit may accompany the offer or be due within an agreed number of days after the Contract Date.

If the number of days is left blank, the contract defaults to five calendar days. This includes weekends and national holidays.

If you anticipate having trouble making your earnest money deposit by the contractual deadline, contact your real estate agent as soon as possible. Your agent may be able to coordinate with the other party to prepare an addendum extending the deposit deadline before it expires.

Keep in mind that any extension must be agreed to in writing and signed by both parties.

Missing deadlines without a formal agreement signed by all parties could put you in breach of contract and potentially place your deposit, and the transaction, at risk.

Is Earnest Money Refundable?

Under certain circumstances. The standard Tallahassee contract includes contingencies that may allow buyers to terminate the agreement and receive their deposit back.

These may include:

• Inspections: Unsatisfactory inspection results during the applicable inspection contingency period.
• Financing: Inability to obtain satisfactory financing within the contractual deadline, provided the buyer meets the contract's requirements.
• Insurance: Inability to obtain satisfactory hazard or flood insurance within the contingency period.
• Appraisal: Certain appraisal issues, subject to the contract's specific requirements.

Refunds depend on the terms of the agreement, applicable deadlines, and proper written termination procedures.

Learn more about the contingency period and due diligence for buyers.

Can the Buyer Lose Their Earnest Money?

Potentially. If a buyer fails to meet contractual obligations or terminates without a valid contractual basis, the seller may have the right to claim the deposit.

Missing important deadlines, including the deposit deadline itself, may put the buyer's money at risk.

If the parties disagree about who is entitled to the deposit, the escrow agent may hold the funds while the dispute is resolved.

What Happens to Earnest Money at Closing?

The earnest money is not an additional fee to the buyer!

When the purchase closes, the deposit is credited toward the purchase price, reducing the amount the buyer needs to bring to closing.

For example, if you're earnest money deposit was $5,000, that $5,000 counts toward the purchase for the buyer, rather than being an additional expense.

Bottom Line

An earnest money deposit is an important part of purchasing a home in Tallahassee. It demonstrates commitment, is credited toward the purchase at closing, and may be refundable under certain contractual circumstances.

Understanding the deposit amount, deadlines, and contingencies before signing a contract can help sellers and buyers avoid costly misunderstandings.

Because when it comes to earnest money, knowing when it's protected is just as important as knowing when it's due.

This article provides general information based primarily on the Tallahassee Board of REALTORS® Contract for Sale and Purchase, revised March 2026. Individual transactions may involve different contracts, amendments, addenda, or statutory requirements. This article is not legal advice. Consult a Florida real estate attorney regarding specific contractual rights or disputes.