- Earnest cash is usually due 1–3 enterprise days after supply acceptance.
- Deposit deadlines are binding below “time is of the essence” clauses.
- Funds ought to at all times be paid to a impartial third celebration (escrow, title, lawyer).
- Lacking the deadline can permit the vendor to cancel the contract.
After your supply is accepted, your first actual monetary funding within the homebuying course of is usually the earnest cash deposit.
“Earnest cash is an effective religion deposit that you just pay quickly after a vendor has accepted your supply on a house,” explains Courtney King, Senior Supervisor of designated brokers at Redfin. “It actually demonstrates your intent to purchase the house and exhibits the vendor that you just’re dedicated to the acquisition. It may possibly additionally act as a safeguard simply in case you breach the contract; then the vendor might need a chance to retain that earnest cash.”
Earnest cash differs from the down fee and different closing prices in that it’s paid earlier, often due inside 1-3 enterprise days after the vendor indicators the buy settlement.
To actually present sellers you’re critical, signing the contract with earnest cash in hand is best. However, because it goes with actual property transactions, there’s a bit extra to the method.
On this article:
When do you pay earnest cash?
How is earnest cash paid and who will get it?
What occurs if earnest cash isn’t paid on time?
Suggestions for assembly your earnest cash due date
FAQs
At what level do you pay earnest cash?
Earnest cash is due shortly after your supply is accepted, and the usual fee timeline is 1-3 enterprise days. The precise deadline shall be specified by your contract, and it’s necessary to be clear on the phrases—do days confer with enterprise days or calendar days? Is there a cut-off time on the ultimate day for the fee?
Often, the timeline for paying earnest cash is as follows:
- Provide accepted (day 0): The contract clock begins.
- Earnest cash is due (1-3 enterprise days): The customer delivers the deposit, ideally to a impartial third celebration like an escrow agent.
- Escrow deposit confirmed (1-2 enterprise days): The funds are verified, and the inspection and contingency interval begins.
Contract wording is necessary: If the acquisition settlement says “inside three enterprise days of acceptance,” weekends and holidays often don’t depend. However at all times double-check how your state or brokerage defines enterprise days. As soon as the deposit is acquired and confirmed, your transaction formally strikes ahead into inspections, appraisal, and financing.
In some areas, like North Carolina, South Carolina, or Texas, you’ll pay a nonrefundable due diligence charge or possibility charge as a substitute of or along with the earnest cash deposit; remember to test together with your agent to know the laws on your location.
How is earnest cash paid and who will get it?
Along with when the earnest cash is due, your contract may even specify the place to ship your earnest cash and how to pay it. Typically, you’ll ship the deposit to a impartial third celebration like a title firm, escrow agent, or an lawyer, which, says King, is the best method of defending your earnest cash as there’s no inherent battle of curiosity.
How you can pay earnest cash
A wire switch is the most typical and safe technique of depositing funds into an escrow account, the place the cash is safely held till closing. A cashier’s test or licensed test could be accepted whether it is delivered in particular person to the third celebration fund holder.
By no means pay earnest cash on to the vendor. This protects each events from fraud, misdirected funds, and authorized disputes if the cash must be returned.
At all times confirm fee directions straight together with your agent or escrow officer earlier than sending funds. Wire fraud focusing on actual property transactions is an actual threat, so double-check particulars by telephone utilizing a verified quantity or in particular person earlier than transferring cash.
Who will get the earnest cash deposit?
The escrow holder (listed in your contract) is answerable for managing the earnest cash deposit. They’ll affirm they acquired the funds, present acceptable documentation, and maintain the cash till certainly one of two issues occurs:
- You shut on the house: The earnest cash deposit is utilized towards your down fee or closing prices.
- The contract is terminated: The cash is launched based mostly on the phrases of your buy settlement—usually refunded to the client should you cancel below a contingency, or stored by the vendor should you breach the contract phrases.
What occurs if earnest cash isn’t paid on time?
Most actual property contracts embrace a “time is of the essence” clause, which implies that deadlines are binding.
“When you’ve signed, you will have an obligation to satisfy your obligations as a purchaser,” King says. “Ensuring you hit these deadlines is essential.” And it needs to be clear what these deadlines are, as a result of should you miss the earnest cash fee window, just a few issues may occur.
- Most notably, the vendor can cancel the contract: In most transactions, the settlement isn’t absolutely in impact till the earnest cash is paid. In case you miss the deadline, the vendor can transfer on to the following purchaser with out penalty.
- You could possibly lose credibility as a purchaser: Even when the vendor doesn’t cancel the contract, lacking the fee deadline could possibly be seen as being unreliable as a purchaser, placing pointless pressure on the transaction and doubtlessly affecting negotiations later.
- The house buy could be delayed: With out the earnest cash deposit, the escrow course of can’t formally start—which could stall inspections, value determinations, or different deadlines which might be tied to that beginning date.
Backside line: Don’t miss your earnest cash due date
Lacking your earnest cash due date, even accidentally, can have critical penalties. To maintain your homebuying journey on monitor, ensure you begin sturdy by:
- Having funds prepared early. Earlier than you even make a proposal, make sure that your earnest cash quantity is accessible (not tied up in an funding account or slow-to-transfer financial savings).
- Confirming the precise due date earlier than signing. Ask your agent to level out the deposit clause in your contract. It can make clear what number of days you will have and whether or not they’re enterprise days or calendar days.
- Planning round weekends and holidays. In case your deadline lands on a Friday or earlier than a vacation, begin the switch early so your escrow holder receives it in time.
- Realizing who to pay. The escrow or title firm is the most secure place to ship funds. By no means wire cash till you’ve verified directions straight together with your agent or escrow officer.
- Getting written affirmation. At all times request proof that your earnest cash was acquired and deposited. It’ll shield you if questions come up later, and also will act as affirmation to proceed the due diligence course of.
Meet your deadlines, confirm your particulars, and your earnest cash will do precisely what it’s meant to: transfer you one step nearer to proudly owning your new house.
FAQs: When is earnest cash due
Can I pay earnest cash on the similar time I submit my supply?
Often, earnest cash is paid after your supply is accepted. By no means ship funds till there’s a signed settlement and verified fee directions from the escrow holder. In aggressive markets, some patrons deposit the cash instantly upon acceptance or present proof of funds upfront to strengthen their supply.
What occurs if the earnest cash deadline falls on a weekend or vacation?
Most contracts use enterprise days, so weekends and holidays don’t depend towards your deadline. For instance, in case your contract says “inside three enterprise days” and your supply is accepted on a Thursday, your earnest cash could be due by Tuesday (assuming no holidays in between). At all times test your settlement—it defines how “days” are counted in your transaction.
Is earnest cash paid earlier than or after the inspection?
Earnest cash is usually paid earlier than the inspection interval begins. As soon as the deposit is acquired, your inspection and contingency timelines formally begin. Earnest cash deposits are likely to “activate” the remainder of the homebuying course of—deposit first, then inspections, appraisal, and shutting.
