What Is an Earnest Money Deposit?
When a Florida buyer signs a purchase contract, they put their money where their mouth is by submitting an earnest money deposit (also called a "binder deposit" or "good faith deposit"). This deposit signals to the seller that the buyer is financially committed to the deal.
The deposit is not paid directly to the seller. It is held in a neutral escrow account by the title company, closing attorney, or the listing broker's brokerage. At closing, the earnest money is credited toward the buyer's purchase price.
How Much Is the Deposit?
Florida has no law requiring a specific earnest money amount. The amount is negotiable and varies by market:
- Residential: Typically 1% to 3% of the purchase price. On a $500,000 home, expect $5,000 to $15,000.
- Commercial: Often 5% to 10% of the purchase price, reflecting the larger transaction size and the seller's greater need for commitment.
- Hot Markets: Buyers may offer larger deposits (5%+) to make their offer more competitive.
When the Buyer Gets It Back
The buyer receives a full refund of the earnest money if they cancel the contract within an applicable contingency period:
- The due diligence (inspection) period expires and the buyer terminates.
- The appraisal comes in below the purchase price and the contract has an appraisal contingency.
- The buyer cannot obtain mortgage approval and the contract has a financing contingency.
When the Seller Keeps It
If the buyer cancels the contract outside of any contingency period without a valid contractual reason, the seller is typically entitled to keep the earnest money as liquidated damages.
Related Terms
- Contract — The purchase agreement that requires the deposit
- Due Diligence Period — The inspection window that protects the deposit
- Liquidated Damages — The remedy when the buyer defaults
Barnes Walker Contract Disputes
Barnes Walker's real estate litigators represent Florida buyers and sellers in earnest money disputes, aggressively pursuing deposit recovery or defending against forfeiture claims when contract contingencies and default provisions are contested. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. § 475.25
Florida law requires real estate brokers to maintain escrow accounts for deposits and establishes dispute resolution procedures when buyer and seller disagree over earnest money.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC