Earnest Money Dispute

What Is an Earnest Money Dispute?

An earnest money dispute occurs when the buyer and seller in a real estate transaction both claim entitlement to the earnest money deposit after a contract falls through. These disputes can stall closings, delay the seller from relisting the property, and tie up the buyer's funds for months.

Common Dispute Scenarios

• The buyer claims they canceled within the inspection period; the seller disputes the timing
• The buyer's financing falls through, but the seller claims the financing contingency was not properly exercised
• The seller failed to disclose a material defect, and the buyer demands a refund after canceling
• The contract deadline passes without closing, and both parties blame the other for the delay

Florida Dispute Resolution Process

When an earnest money dispute arises, the escrow holder cannot release the funds without mutual consent or a court order. The resolution process typically follows this sequence:

• Step 1: Demand letters — Each party sends written demands to the escrow holder claiming the deposit
• Step 2: Mediation — Required under most FAR/BAR contracts before filing suit
• Step 3: FREC or court — The escrow holder requests a FREC disbursement order or files an interpleader action in circuit court
• Step 4: Judicial determination — A judge reviews the contract and facts to determine who is entitled to the deposit

Related Terms

• Earnest Money — The deposit at the center of the dispute
• Liquidated Damages — The contractual framework for deposit forfeiture
• Escrow Agreement — Governs the escrow holder's obligations during a dispute

Barnes Walker Earnest Money Litigation

Barnes Walker's real estate litigators resolve earnest money disputes through mediation, FREC proceedings, and circuit court litigation across Southwest Florida. Request a legal inquiry for assistance.

Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC