Buying a home in Salt Lake City and seeing “earnest money” in your offer? You are not alone. This deposit can feel confusing, especially if you are a first-time or relocating buyer. In a few minutes, you will understand what earnest money is, how it works under Utah’s standard contract, and how to protect your funds from offer to closing. Let’s dive in.
Earnest money basics in Utah
Earnest money is a good-faith deposit that shows the seller you are serious. It is not your down payment, but it often applies toward your down payment or closing costs at settlement. If the sale closes, the funds are credited to you.
In Utah, the standard Real Estate Purchase Contract (REPC) sets the rules for earnest money. The contract also names who holds the funds in escrow and how those funds can be released. In Salt Lake County, a title or escrow company often holds the deposit, though a seller’s brokerage trust account is also used in some cases.
Who holds the funds and how they are handled
The REPC names the escrow holder, which is commonly the title or escrow company handling your closing. These companies and brokerages must follow trust accounting rules when they receive and deposit your funds. They issue receipts, track the money, and release it only as the contract directs.
If your deal closes, the deposit is applied to your buyer funds. If your deal ends and you are entitled to a refund under the contract, the escrow holder returns the money following the REPC’s procedures.
When and how you deposit
Your contract will state when the deposit is due. In practice, many offers in Salt Lake City require delivery within 24 to 72 hours after acceptance. Always follow the exact deadline in your REPC.
You can typically deposit by wire transfer, cashier’s check, electronic transfer, or personal check if the holder accepts it. In competitive situations, wires are common. Always request and keep a copy of the receipt or confirmation of deposit.
How much earnest money to offer in Salt Lake City
Amounts vary by price point and competitiveness. In modestly competitive conditions, many buyers offer a flat $1,000 to $5,000 on average-priced homes. A common rule of thumb is 1 to 3 percent of the purchase price, so $5,000 to $15,000 on a $500,000 home is typical. In very competitive or luxury situations, deposits can be higher, and some buyers include non-refundable terms tied to milestones.
A larger deposit can strengthen your offer because it shows commitment. It also raises your risk if you later terminate outside your contract protections. Match your deposit to your comfort level and the market conditions.
Contingencies that protect your deposit
Several contract deadlines protect your earnest money when you follow them precisely:
- Inspection or due-diligence period. You can inspect the home and, if the contract allows, cancel within the inspection period and receive a return of your deposit. You must give written notice within the deadline and in the manner the REPC requires.
- Financing contingency. If your financing fails before the financing deadline and the REPC allows termination, your deposit is typically returned.
- Appraisal contingency. If the appraisal comes in low and the REPC gives you the right to cancel or renegotiate, your deposit return depends on following the contract language and deadlines.
- Title review. If you object to title issues within the allowed period and terminate under the REPC, your deposit is generally returned.
The key is precision. Send notices in writing, on time, and per the process in your contract.
If the deal ends: refunds, forfeitures, and disputes
If you cancel for a reason allowed under the REPC and within the deadlines, you are generally entitled to a refund. You and the seller will often sign a mutual release that instructs escrow to return your funds.
If you cancel without a valid contractual reason or miss deadlines, the seller may have remedies. The REPC often allows the seller to keep the deposit as liquidated damages if the buyer defaults, and some contracts permit the seller to pursue other legal remedies. The outcome depends on the contract and facts of the situation.
If the seller defaults, your remedies typically include a return of your deposit and the option to pursue other contract remedies. If there is a dispute over the funds, escrow will usually hold the money until there is mutual written instruction, mediation or arbitration resolution if required, or a court order. These situations can take weeks or months to resolve.
Non-refundable deposits: what to know
In competitive markets, some buyers agree to make all or part of the deposit non-refundable after a milestone, such as the inspection deadline. This can strengthen an offer, but it increases your risk if you later terminate for reasons not covered by remaining contingencies. The REPC must clearly state what portion is non-refundable, when it becomes non-refundable, and under what conditions.
If you are unsure, consider other ways to strengthen your offer, such as a shorter inspection period you can meet, rather than giving up refund rights too early.
Salt Lake City scenarios
- Scenario A: Typical purchase with protections. A buyer offers 1 percent on a $450,000 home, deposits within 48 hours to the title company, and has a 10-day inspection period. A major roof issue is discovered, the buyer negotiates but ultimately cancels within the inspection period, and the deposit is returned per the contract.
- Scenario B: Competitive offer with tight deadlines. A buyer offers 2 percent earnest money and a 5-day inspection. Damage is found after the deadline and there is no timely written objection. Without a valid contract right to cancel, the buyer risks losing the deposit.
- Scenario C: Partial non-refundable deposit. A buyer offers $10,000 with $2,500 becoming non-refundable after inspection. The loan later fails after the inspection period. The buyer may forfeit the $2,500 under the non-refundable clause.
Step-by-step checklist to protect your funds
- Confirm the escrow holder and delivery method on day one. Ask exactly who holds your money and how to deliver it.
- Calendar every deadline. Track inspection, financing, appraisal, and title deadlines so you can act on time.
- Verify wire instructions by phone. Call a known number for the escrow or title company to confirm routing details before sending any money.
- Send early and get a receipt. Deliver funds ahead of the deadline and save the deposit receipt and any bank confirmation.
- Put all notices in writing. Use the REPC forms and send written notices before deadlines. Keep copies of everything you send and receive.
- Keep your documents. Save inspection reports, appraisal results, lender communications, and any denial letters. These can be key if there is a dispute.
- Avoid casual extensions. If you need more time, negotiate a written extension before a deadline expires.
Relocating or buying remotely
You can wire earnest money from out of state, and many Salt Lake City closings are handled with remote-friendly steps. Confirm the escrow holder by phone, verify wiring details using a trusted contact number, and ask for same-day confirmation of receipt. If you are making a fast decision, use a realistic inspection window so you can complete due diligence on time.
Work with a local guide you trust
Earnest money is straightforward when you know the rules, but small misses can be costly. You deserve a calm process, clear guidance on deadlines, and strong negotiation when the market is competitive. For hands-on help from offer to closing, connect with Tricia Vanderkooi.
FAQs
How much earnest money should I offer in Salt Lake City?
- Many buyers offer $1,000 to $5,000 on average-priced homes, or about 1 to 3 percent of the price, with higher amounts in very competitive or luxury situations.
When is earnest money due after an offer is accepted in Utah?
- Your REPC sets the deadline, and in local practice it is often within 24 to 72 hours, so plan to deliver promptly and get a receipt.
If I cancel during the inspection period, do I get my deposit back?
- If you terminate within the inspection deadline and follow the REPC’s written notice rules, you are generally entitled to a return of your earnest money.
What happens to my earnest money if my loan is denied?
- If your financing fails before the financing deadline and the REPC allows termination, your deposit is typically returned when you provide proper notice and documentation.
Can a seller keep my earnest money if they back out of the sale?
- If the seller defaults, your remedies commonly include a return of your deposit and the option to pursue other contract remedies as allowed by the REPC.
Who decides what happens in an earnest money dispute?
- Escrow usually holds the funds until there is a mutual written release, a mediation or arbitration outcome if required, or a court order.
What is the difference between refundable and non-refundable earnest money?
- Refundable earnest money is returned if you terminate under allowed contingencies and deadlines, while non-refundable funds are forfeited under the conditions stated in the contract.
How do I avoid wire fraud when sending my deposit?
- Call the escrow or title company using a known phone number to confirm wire instructions and never rely only on emailed details or links.
Can I wire earnest money from out of state before seeing the home?
- Yes, many buyers wire funds remotely, but verify instructions by phone, request immediate receipt confirmation, and choose realistic due-diligence timelines.
What if my earnest money check bounces or is late?
- Failure to deliver funds as required can place you in default under the REPC, so cure the issue immediately or you risk contract remedies against you, including loss of the deposit.
