Earnest Money in Utah: How Much to Put Down and When a Buyer Gets It Back
Earnest money is the deposit that shows a Utah buyer is serious. This guide covers typical amounts, the delivery deadline, and the points in the contract where the deposit is refundable, partly refundable or lost.
A buyer who makes an offer on a Utah home puts money on the line before any loan is approved. That deposit is called earnest money. It tells the seller the offer is serious, and it is the seller's compensation if the buyer walks away without a reason the contract allows.
Most buyers get the deposit back or see it applied to their purchase. The ones who lose it usually missed a deadline or left a box unchecked. This guide explains how much is typical, where the money sits, and the exact points at which it stays refundable or goes to the seller under Utah's Real Estate Purchase Contract (REPC).
This is general information about the state form, not legal advice. For a specific contract, consult a Utah real estate attorney.
What Earnest Money Is
Earnest money is a deposit made shortly after the seller accepts an offer. It is not an extra cost. At closing it counts toward the purchase price, the same as the down payment. The amount is written on the first line of the purchase price section of the contract.
If the sale closes, the buyer never sees the money again as a separate item; it simply reduces what is owed. If the sale falls apart, the contract decides who receives it.
How Much Earnest Money Is Typical
Utah law does not set an amount. It is negotiated like everything else in the offer. A common range is roughly 1% to 2% of the purchase price, with fixed amounts of a few thousand dollars on lower-priced homes. On a home priced near the Salt Lake City median of $590,000, that works out to several thousand dollars.
The right number depends on the situation:
- Several offers expected: a larger deposit signals commitment without raising the price.
- A home that has been sitting: a modest deposit is usually accepted.
- New construction: builders use their own contracts and often require larger deposits, sometimes non-refundable once options are selected. Read those terms closely.
A bigger deposit only adds risk if the buyer misses a deadline. Handled correctly, the amount matters less than the dates.
Who Holds the Money and When It Is Due
Under the current REPC, the buyer delivers the earnest money to the buyer's brokerage no later than four calendar days after acceptance. The brokerage then has four calendar days to deposit it into its real estate trust account or, if the parties choose, with a title insurance company using a separate addendum.
The money does not go to the seller directly, and it should never be handed to an individual. If the deposit is not delivered or deposited on time, the seller may cancel the contract. When a delivery date lands on a Saturday, Sunday or legal holiday, the form moves it to the next business day.
When the Deposit Is Refundable
Whether a buyer gets the money back depends on which stage the contract is in and which conditions were checked on the first page.
| Situation | What happens to the earnest money |
|---|---|
| Buyer cancels by the Due Diligence Deadline | Returned to the buyer |
| Home appraises low and buyer cancels by the Appraisal Deadline | Returned to the buyer |
| Buyer cancels over loan terms after due diligence, by the Financing Deadline | Split: the seller receives the percentage stated in the contract, 50% if left blank |
| Loan fails after the Financing Deadline | All of it goes to the seller |
| Buyer backs out with no condition in place | Seller may keep it as damages |
| Seller defaults | Returned to the buyer, who may also claim an equal amount as damages |
| Home is badly damaged before closing and the contract is cancelled | Returned to the buyer |
Due diligence: the widest exit
During due diligence the buyer inspects the home and reviews the seller's disclosures, the title report, HOA documents, insurance quotes and anything else that matters to the decision. If the results are unacceptable for any reason, the buyer can cancel in writing by the Due Diligence Deadline and the deposit comes back. The buyer does not have to prove the reason is a good one. The form leaves it to the buyer's sole discretion.
Once that deadline passes without a cancellation or a written resolution, the condition is treated as waived and the deposit becomes non-refundable, except for the appraisal and financing protections below.
Appraisal: protection against overpaying
If the appraisal condition applies and the home appraises for less than the purchase price, the buyer can cancel by the Appraisal Deadline and recover the deposit. The cancellation notice has to include a complete copy of the appraisal. Many buyers use a low appraisal to reopen the price instead of cancelling.
Financing: partly protected
The financing condition is where buyers are most often surprised. A buyer who is not satisfied with the loan terms can cancel after the Due Diligence Deadline and before the Financing Deadline, but part of the deposit goes to the seller. The contract states the share as a percentage. If the box is left blank, it is 50%.
After the Financing Deadline, if the loan does not fund, either side can cancel and the seller keeps the entire deposit as liquidated damages. That is the seller's only remedy in that situation; the seller cannot also sue for more.
The Conditions Only Apply If the Boxes Are Checked
Due diligence, appraisal and financing are optional conditions. Each one protects the buyer only if it is checked in the affirmative on the first page of the contract. An unchecked box means that exit does not exist. Buyers sometimes waive conditions to make an offer more attractive, which can work, but it turns the earnest money into a real bet. The current form and its recent changes are covered in what changed in Utah's new Real Estate Purchase Contract.
Deadlines Are Exact
The REPC says time is of the essence. Unless the contract states otherwise, anything due on a given date must be done by 5:00 p.m. Mountain Time that day, and notices have to be in writing, signed, and received by the other side or their agent by the deadline. A cancellation sent at 5:10 p.m. is late.
Only the earnest money dates and the Settlement Deadline roll to the next business day when they fall on a weekend or holiday. The Due Diligence, Appraisal and Financing deadlines do not. A due diligence deadline set for a Sunday ends on Sunday.
What Happens in a Dispute
When both sides agree on who gets the money, the brokerage or title company releases it. When they disagree, the holder generally keeps the funds in trust until the parties sign a release or the dispute is resolved. The contract allows the parties to try mediation first, and the prevailing party in a lawsuit or arbitration can recover attorney fees. Small amounts in dispute are often settled with a split because fighting costs more than the deposit.
How Buyers Protect Their Deposit
- Check the conditions. Confirm due diligence, appraisal and financing are marked the way intended before signing.
- Choose the financing percentage. Decide what share goes to the seller on a financing cancellation instead of accepting the 50% default.
- Calendar every deadline with the 5:00 p.m. cutoff, and avoid weekend dates.
- Order the inspection immediately. Inspectors book up, and results are needed with time left to negotiate.
- Get insurance quotes early. Cost and availability are part of due diligence; see why Utah leads the nation in dropped home insurance policies.
- Stay close to the lender. Ask for full underwriting approval before the Financing Deadline, and avoid new debt or job changes during the loan.
- Extend in writing. If more time is needed, both sides must sign an addendum before the deadline passes.
- Cancel in writing, on time. A phone call or text to the agent is not a cancellation.
The Seller's Side
Sellers should treat earnest money as modest protection, not a payday. During due diligence a buyer can leave and take the deposit along. The seller's position improves with each deadline that passes. Sellers who want more security can ask for a larger deposit, shorter deadlines, or a higher percentage released on a financing cancellation. An offer with conditions waived and a strong deposit is safer than a higher price with long deadlines, a point worth weighing when comparing offers. More on evaluating offers is in negotiation tips when receiving a cash offer.
First-time buyers can find the rest of the process in the Utah first-time home buyers guide and how the Utah Real Estate Purchase Contract works. Homes for sale statewide, including St. George, are on Best Utah Real Estate.
Posted by Kristopher Larson
Frequently asked questions
How much earnest money is normal in Utah?
There is no required amount. Roughly 1% to 2% of the purchase price is common, with a few thousand dollars typical on lower-priced homes. The amount is negotiable and is credited toward the purchase at closing.
Is earnest money refundable in Utah?
Yes, in specific situations. A buyer who cancels in writing by the Due Diligence Deadline, or by the Appraisal Deadline after a low appraisal, gets the deposit back, provided those conditions were checked in the contract. After those deadlines the deposit is generally at risk.
When is earnest money due after an offer is accepted in Utah?
Under the state purchase contract the buyer delivers it to the buyer's brokerage within four calendar days of acceptance. The brokerage then has four calendar days to deposit it in its trust account or with a title company.
What happens to earnest money if the buyer's loan is denied?
It depends on timing. If the buyer cancels over loan terms before the Financing Deadline, the seller receives the percentage stated in the contract, which is 50% if left blank. If the loan fails after the Financing Deadline, the seller keeps the full deposit.
Who holds earnest money in Utah?
The buyer's brokerage holds it in a real estate trust account, or a title insurance company holds it if the parties agree to that in an addendum. It is not paid directly to the seller.
Does earnest money go toward the down payment?
Yes. At closing the deposit is applied to the purchase price, so it reduces the cash the buyer needs to bring for the down payment and closing costs.
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