How to Get Earnest Money Back From A Title Company

Dec 9, 2022

How To Get Earnest Money Back From A Title Company

A buyer may have a few ways to back out of a deal and still get their earnest money back from the title company based on the real estate contract. Most contracts favor the homebuyer, but this may only be true in some cases. Learn more about getting earnest money back from a title company with our Title Company in Birmingham.

What is Earnest Money 

Earnest money is a payment typically provided at the signing or execution of a contract that the buyer offers. It is designed to demonstrate a commitment to the agreement with the idea that they put a little money at risk to assure the seller that they are committed to following through and not just looking around to see if they can find something because they’re going to put some money on the line for it. This amount is typically one percent of the purchase price.

Earnest money is often held by one of the involved real estate brokerages — about 75 percent of the time it will be held by a real estate brokerage. However, there are situations where a real estate closing company or real estate title company has the funds. 

Real Estate Contract Issues 

A real estate contract has contingencies that allow the purchaser to get their earnest money back. You will often see inspection contingencies. If the purchaser has an inspection done, it is satisfied with the inspection results.

Another example is if the seller terminated the contract for any reason illegally. In that case, buyers are entitled to get their earnest money back. 

One last example is if the bank denies the buyer a loan, the buyer is entitled to get their earnest money back with no penalty. 

Covering Your Earnest Money  

Because unexpected things can happen in the buying process, it is a good idea to ensure you are covered. Write it into the contract to ensure you get your earnest money back in these unfortunate events. Write out the contingencies in which you can get your earnest money back. 

How to Get Earnest Money Back From A Title Company

For earnest money to be released, both parties must sign a mutual lease directing the holder of the earnest money to release it. Sometimes, sellers may not agree to give money back when a buyer wants out of a deal. In this case, there is nothing a buyer can do. The money holder will simply hold it until an agreement is made. The money doesn’t go back to the seller, either. This isn’t often communicated well. A buyer and seller must mutually agree to release the earnest money. Even if there is an inspection issue, the funds will not be released unless agreed upon by both parties. 

When an agreement is reached, the steps for getting your earnest money back is:

  1. Contact the Seller in Writing 
  2. Sign Release Forms 
  3. Contact the Escrow Company 

Not many steps are involved, but each is very important in getting your earnest money back. Communicating with the seller in writing is crucial so there is a record of everything discussed. If you need help with this, your agent should be able to assist you. Signing the release forms is also important because it shows that you and the seller are on the same page. Contacting the escrow company is the last and most important step in getting your earnest money back. The title company must be on the same page. They will send documents, and once they are processed, you should get your earnest money back within a few days. 

If a buyer and seller cannot agree, the title company holding the earnest money can interplay it and have a judge decide. This usually isn’t in the best interest because funds for lawyers and such will come out of the earnest money. If you have $2,500 held up in earnest, that could be spent for the court costs and some. 

Earnest Escrow With Heights Title

When it comes explicitly to earnest money, it is wise to know the circumstances when you could get it back. This ensures you will be in a good situation should something fall through with the house. Contact Heights Title in Birmingham for all your real estate title needs. 


This material is provided as a courtesy and for educational purposes only.  Please consult your title professional for specific information regarding your situation.

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