Earnest Money Disputes in Florida: Who Gets the Deposit When the Deal Falls Apart

The deposit sits in escrow, both sides believe it is theirs, and the escrow agent will not release it to either. Here is how Florida contracts and Florida law actually resolve it.

What the deposit is and who holds it

The earnest money deposit, called the escrow deposit in the Florida Realtors/Florida Bar contract, is the buyer's good-faith stake in the deal. Under the standard contract it is due within three days of the effective date, with any additional deposit due by the date in paragraph 2. It is held by the escrow agent named in the contract, usually the title company that will close the transaction or the listing brokerage, and it is applied to the purchase price at closing.

The single most important thing to understand is that the escrow agent is a stakeholder, not a judge. Whether the agent is a title company or a broker, it holds the money for both parties and may release it only when the contract says so, when both parties sign a release, or when a court orders it. An agent that releases a disputed deposit to one side without that authority is personally liable for it.

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When the buyer gets it back

The FAR/BAR contract gives the buyer several paths to a full refund, and every one of them has a deadline. The buyer is entitled to the deposit if they terminate in writing during the inspection period under the AS-IS contract, if the financing contingency is exercised on time after a good-faith loan application, if the appraisal falls short under a contract with an appraisal contingency and the buyer elects to cancel, if the seller cannot deliver marketable title after the cure period, if the property is damaged before closing and the buyer chooses not to proceed, or if the buyer cancels within the statutory condominium document review period.

The word that decides most disputes is timely. A buyer who emails a cancellation on day 11 of a 10-day inspection period has not exercised the contingency; they have defaulted. Our contract deadline calculator exists because these dates are computed in calendar days, end at 5 p.m., and move when they land on a weekend or holiday.

When the seller keeps it

If the buyer fails to close for any reason not excused by a contingency, the buyer has defaulted, and paragraph 15 of the FAR/BAR contract gives the seller a choice: keep the deposit as agreed-upon liquidated damages, or sue for specific performance. Sellers almost always take the deposit. The seller is not entitled to both. A seller who defaults, by refusing to close on a property that is under contract, returns the deposit and may face a specific performance suit from the buyer.

Note that a buyer who cannot get financing is not automatically excused. The financing contingency protects a buyer who applied in good faith, cooperated with the lender, and was denied. A buyer who never applied, changed jobs, or took on a car loan during underwriting and was denied for that reason has usually defaulted.

What happens when both sides claim it

The escrow agent sends both parties a written notice that the deposit is disputed and asks for signed release instructions. If both sign, the money moves. If they do not, the contract requires mediation before litigation, and most disputes settle there, often with a split that reflects who is more likely to win. If mediation fails, the escrow agent may interplead the funds, meaning it deposits the money with the court, names both parties, and steps out. The court then decides, and the agent's attorney fees typically come out of the deposit.

A title company acting as escrow agent follows the contract and section 18 of the FAR/BAR form. A broker holding the deposit has an additional duty under section 475.25(1)(d) of the Florida Statutes: on receiving conflicting demands, the broker must notify the Florida Real Estate Commission within 15 business days and then follow one of the statutory procedures, which include mediation, arbitration, interpleader, or an escrow disbursement order from FREC. Brokers who skip this step risk their license, which is why many prefer the title company to hold the deposit from the start.

Six ways to avoid the dispute

• Put every deadline on a calendar the day the contract is signed, and confirm them with the other side in writing.
• Cancel in writing, to the addresses in the contract, before the deadline. A text to the agent is not notice.
• Apply for the loan within the contract's application period and keep the denial letter if it comes.
• Do not let the deposit be held by a party to the deal. A neutral title company is the cleanest choice.
• If the buyer needs more time, sign an addendum extending the date before it passes, not after.
• When the deal dies, ask the escrow agent for the release form immediately. Delays harden positions.

The deposit is also the reason wire fraud hurts so badly: it is often the first wire in the transaction and the one criminals target. Confirm instructions by phone before sending, as described in wire fraud at Florida closings.

How Atlantic Title handles a disputed deposit

As escrow agent we hold the deposit in a trust account, confirm receipt to both sides, and disburse only on the contract's terms or a signed release. If a dispute arises we send the statutory notices, hold the funds, and cooperate with mediation. We do not decide the merits, and we say so plainly to both parties, because that neutrality is exactly what makes a title company the right place for the money. Our escrow services page explains the accounts and controls behind it.

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