If the transaction doesn’t close, who gets the Earnest Money?
The short answer is “read your Earnest Money Contract or ask your Realtor”. However, it is rarely that simple. Unless there is an acceptable release of the Earnest Money, this money may sit in escrow for awhile. As a title company, in most (but not all) cases, we can’t interpret the contract signed between the buyer and seller and we must remain neutral. It is our duty to “do as instructed” and to “protect all parties”. If we receive conflicting instructions from both, buyer and seller (and/or their agents) then we likely will be required to hold the earnest money until a mutual agreement has been reached. We can hold the money here at the title company for about two years, at which time it is typically turned over to the State of Texas if no resolution is reached. The State of Texas will then hold it until a mutual agreement is reached. In some cases, this can be avoided by specific wording in an Earnest Money contract, specific notification to the defaulting party or if the amount of
