An earnest money deposit — also called a good faith deposit — demonstrates that a buyer is serious about purchasing a property. In Florida, understanding how earnest money works can protect your funds and strengthen your offers.

How Much Earnest Money is Standard in Florida?

There is no legal minimum for earnest money in Florida, but market norms in Broward County typically run:

  • 1% to 3% of the purchase price for most residential transactions
  • Higher amounts (3–5%+) may strengthen an offer in competitive multiple-offer situations
  • $1,000 to $5,000 is common on lower-priced properties

A larger earnest money deposit signals stronger buyer commitment and can make your offer more appealing — especially important when competing against other buyers.

Where is Earnest Money Held?

Under Florida law, earnest money must be held in an escrow account by a licensed escrow agent. This is typically:

  • The title company handling the closing
  • A real estate attorney
  • The real estate brokerage (in a separate escrow account)

Per the FAR/BAR contract, the buyer must deposit earnest money within 3 business days of the effective date (the date both parties sign the contract). Failure to timely deposit can put the buyer in default.

When is Earnest Money Refundable?

Under the AS IS contract:

  • During the inspection period: Fully refundable. The buyer can cancel for any reason and receive the full deposit back.
  • After the inspection period but before closing: Generally not refundable unless a specific contingency in the contract is not met. Common contingencies that protect the buyer's deposit include the financing contingency (if the buyer cannot obtain a mortgage).
  • If the seller defaults: The buyer is entitled to a refund of the deposit and may have other legal remedies.

When is Earnest Money at Risk?

The buyer's earnest money deposit is at risk if:

  • The buyer defaults on the contract after the inspection period (walks away without a contractual right to cancel)
  • The buyer fails to close without a valid contractual excuse

If a buyer defaults, the seller typically has the right to retain the deposit as liquidated damages. However, Florida escrow law requires both parties to provide written instructions to the escrow holder before funds can be released in a dispute. Disputed deposits may require mediation or court order to resolve.

Florida Escrow Dispute Law

If there is a dispute over the earnest money, the title company or broker holding the funds cannot simply release them to one party. Florida law (Chapter 475 for brokers; Chapter 626 for others) requires the escrow holder to:

  1. Notify FREC (Florida Real Estate Commission) if a broker is involved
  2. Attempt mediation
  3. File an interpleader action with the court if the dispute cannot be resolved
Buyer's Tip: The inspection period is your primary protection. Use it. Schedule inspections immediately after the contract is executed so you have time to review results and make an informed decision before the window closes.
Have questions about your specific situation? Every real estate transaction is unique. Call or email HP Singh at Coastal Group Brokers for personalized guidance.