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Is earnest money refundable in Florida?

Is your buyer’s earnest money refundable in Florida? Earnest money deposits usually require that buyers put a hefty amount of money down on the property they want. For that reason, many buyers want to know if their earnest money is refundable. This blog was created with you and your clients in mind. We’ll tell you everything you need to know about if earnest money is refundable in Florida, including the typical amount of earnest money, whether a seller can keep the earnest money, and the common contingencies that your buyer might encounter (or want to add to the contract). 

The Typical Amount of EMD in Florida

What is the typical amount of earnest money in Florida, anyway? That depends on many factors, including the type of property you’re purchasing and whether it’s a hot market. “A typical deposit might be 5-10% of the amount you offer in the purchase contract,” buyer agent Kim Bregman states in her Optima Properties blog. She goes on to say, “the final amount is negotiable and will depend on how long it takes to close and the number and types of contingencies in the contract.” 

Can a Seller Keep EMD in Florida?

Every home purchase involves a bit of risk, and it’s helpful for some buyers to view things from a worst-case scenario mindset. With that in mind, we ask the question, “Can a seller keep the earnest money deposit in Florida?” Yes, but usually this only happens if the buyer defaults on the contract. As long as your buyer has met all the deadlines they need to meet and the sale goes through, the buyer should get their earnest money deposit back (credited toward the final purchase price). 

Realtors on the Find Southwest Florida Homes Blog said that “if the seller meets all the terms of the contract, the seller will keep the earnest money. If the seller does not meet the terms of the contract, then you, as the buyer, receive a total refund of the earnest money.” They advised that “the best advice is to read your sales contract thoroughly and get your questions answered before you complete the offer. If you’re not satisfied with the explanation, seek professional legal counsel.”

When is the EMD Refundable in Florida?

The earnest money deposit is refundable in Florida only for a specific amount of time. The Lenders Network Blog stresses that “If a buyer cancels a sales contract during the option fee, then the earnest money will be returned to the buyer. However, if the buyer cancels the contract after the option period, the earnest money deposit is generally considered non-refundable.” Of course, there are exceptions to this rule, and those exceptions are called contingencies.

Real Estate Contingencies for Your Buyer’s EMD

Contingent on the Sale of Buyer’s Home

One example provided on the Florida Property Center blog is “a buyer making an offer on a new home before selling his existing home.” The buyer needs to sell his present home before being able to get financing on the new one, so he makes his offer contingent on the sale of his existing home.”

Every contingency should that things be taken care of within a specified time period. “If the buyer is able to get his present home sold within that time period, the deal can go forward. But if he fails to sell, the seller has the option of getting out of the deal. In most cases, sellers won’t accept this kind of contingency, because they feel that they can find another buyer capable of closing the deal without needing to sell another home first.”

“In most cases, sellers won’t accept this kind of contingency, unless it contains a provision for a 72-hour kick out clause,” the Southwest Florida Realty blog states.

A Kick-Out Contingency Clause for Sellers

The Florida Property Center blog says “A 72-hour kick-out clause can be added that states that the buyer has 72 hours to release that contingency from the contract or the contract becomes null and void. This situation happens when the sellers get a backup offer that does not contain this contingency. New home builders are often willing to accept an offer contingent on the sale of an existing home.”

Contingent Upon the Buyer Securing a Loan

This contingency allows buyers to back out of the loan if they’re unable to obtain financing within a specified period of time. “These contingencies usually have an interest rate limit included so that if you are able to get financing but not at the interest rate acceptable to you then you would still be able to get out of the contract,” according to Florida Property Center.

Contingent on Satisfactory Completion of Inspection

Sean Skirrow, a licensed Florida home inspector, says on the Dream Home Inspection site, “A home inspection contingency, also referred to as the due diligence contingency, allows buyers to back out of a contract if a home inspector finds critical issues that the seller refuses to fix or compensate for. You should never go through with buying a home without hiring an experienced professional home inspector first.

“Similar to how lemon laws protect you from buying a new car that doesn’t work right, the home inspection contingency can protect you from buying a home with substantial well-hidden problems. You may think the home is safe, the structure is sound, and all major systems work as they should, to find out a few months down the road that the house had serious issues that will cost tens or hundreds of thousands of dollars to fix,” he continues.

“Depending on the agreed upon terms, the buyer can approve the home inspection report and move forward, back out of the contract due to unexpected issues, request time for further inspections, or request that the seller pay for repairs. If the buyer requested the seller pay for repairs and the seller refuses, the buyer is free to back out of the contract.”

Contingent on Appraisal of the Home

Jack Bernstein, a lawyer located in Tampa, Florida with over 36 years of experience, describes appraisal contingencies on the Tampa Real Estate Insider website

“When there’s an appraisal contingency, the sale of the property depends on an appraisal. Usually the condition is that the property must appraise for the agreed-upon purchase price for the contract of sale to be binding. An appraisal contingency creates the condition that if the property doesn’t appraise for the agreed-upon purchase price, the buyer has the option to decline to go through with the sale.”

He goes on to explain why appraisal contingencies matter: “Most buyers need a mortgage to purchase the property, but mortgage lenders don’t want to issue loans for more than the value of the property. 

Let Close Concierge Take Care of It

As long as the buyer has upheld their end of the deal, the earnest money is refundable in Florida during the option period. That said, there is a lot to remember. The timeframe from contract to close can be time-consuming and tedious for agents. There are so many deadlines to meet, and real estate agents must maintain broker, state, and national compliance policies or they’re in danger of being audited or worse.

Close Concierge was developed with the busy real estate agent in mind. We know exactly how to help by saving you time, so you can close new contracts instead of dealing with the tedium of the transaction process. Our transaction coordinators offer white-glove service, handling your transactions with care and without error, so you can continue to maintain compliance! Contact us today for a free demo – we would love to help!


Tuesday 6th of September 2022

What happens if I’m supposed to close on a house today but an open permit was found on the property Friday. I have opted not to sign until the seller closes this permit. My realtor told me if I do not sign, I could lose the earnest money. Is this true?

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