Have you heard the term “earnest money” and wondered how it actually works in Utah? You’re not alone. This good‑faith deposit can feel confusing, especially if you’re buying your first home in Salt Lake City. The good news is that once you understand the basics, you can use earnest money to strengthen your offer while protecting your interests.
In this guide, you’ll learn what earnest money is, how much is typical in Salt Lake County, when it’s due, who holds it, and when it’s refundable. You’ll also get practical steps to follow so you avoid common pitfalls. Let’s dive in.
Earnest money basics in Utah
Earnest money is a buyer’s good‑faith deposit that accompanies your offer to purchase a home. It shows commitment to the seller and creates a financial consequence if you later breach the contract. If the sale closes, the deposit is typically applied to your down payment and closing costs.
In Utah, the funds are held in trust by a neutral title or escrow company, or by a real estate broker in a trust account, depending on what your contract states. Utah licensing rules require proper handling of client funds, including prompt deposit and accurate records. Your offer should clearly identify who will hold the deposit.
Whether your earnest money is refundable comes down to the written terms of your purchase contract and its contingencies. If you cancel within a valid contingency and meet the notice requirements, you usually get your deposit back. If you default after contingencies expire, the seller may be entitled to keep it.
Typical amounts in Salt Lake City
In many markets, including Salt Lake City, a common earnest money range is 1% to 3% of the purchase price. In more competitive situations, buyers sometimes offer 3% to 5% or more to stand out. For entry‑level homes and condos, some buyers use a flat deposit such as $2,000 to $10,000.
Market norms change with inventory and demand, so use these as general guidelines. Your agent can advise on what is competitive for your specific price point and neighborhood. You want a deposit that signals seriousness, fits your budget, and aligns with your risk tolerance.
When it’s due and how it’s held
Your purchase contract sets the deadline for delivering earnest money. In Utah practice, a common window is 24 to 72 hours after mutual acceptance of the offer. Whatever you agree to, put it in writing and fund it on time.
Always obtain a dated receipt and confirmation from the holder that funds were deposited into the trust or escrow account. The deposit will remain there until closing or until the parties sign instructions to release it under the contract. At closing, it is usually credited to your buyer funds on the settlement statement.
When it’s refundable
You are typically entitled to a refund if you cancel within a contingency period and follow the contract’s notice rules. Common refundable scenarios include:
- Inspection: You terminate within the inspection period after providing timely written notice per the contract.
- Financing: Your loan is denied and you cancel under the financing contingency, with any required documentation and within the deadline.
- Appraisal: The appraisal doesn’t support financing and you terminate according to the appraisal contingency timelines.
- Title: Unresolved title defects remain past cure deadlines and you properly cancel.
- Seller default: The seller fails to perform and you terminate per contract terms.
- Mutual cancellation: Both parties sign a cancellation and disbursement instruction.
In all cases, timing and proof matter. Keep copies of your notices, delivery confirmations, and any required documentation.
When you could forfeit it
You risk losing your earnest money if you breach the contract after contingencies are removed or deadlines pass. Common non‑refundable situations include:
- You waive or miss a contingency deadline, then walk away without a valid contractual reason.
- You fail to deliver earnest money by the deadline and the seller declares a default.
- You do not provide the required written notice to cancel within the agreed timeframes.
- You back out after offer acceptance without a contractual basis.
“Forfeiture” is not always automatic. Many contracts require the seller to choose a remedy, and some disputes are resolved through negotiation, mediation, or arbitration. Still, your best protection is to meet every deadline and follow the notice instructions exactly.
Utah contract details to watch
In Salt Lake County, buyers and sellers commonly use Utah Association of REALTORS® forms that contain a dedicated earnest money section. Here are key items to confirm in your offer:
- Amount and deadline: Specify the deposit amount and the exact due date.
- Holder: Identify whether a title/escrow company or a broker trust account will hold funds.
- Contingency periods: Clearly state timelines for inspection, financing, appraisal, and title review.
- Written notices: Understand how and when to deliver notices if you plan to cancel or object.
- Dispute resolution: Know how the contract handles earnest money disputes and disbursement.
Utah does not have a separate statute that rewrites these rules. Handling and disbursement follow your contract, Utah regulatory rules on trust accounts, and general contract law. If you’re unsure about a term, get clarity before you sign.
Step‑by‑step for Salt Lake City buyers
Before you write an offer
- Get pre‑approved by a lender to strengthen your position and set realistic timelines.
- Discuss a competitive deposit with your agent based on current local conditions.
- Review the standard contract sections that control your contingencies and deadlines.
When you make an offer
- Put the earnest money amount and delivery deadline in writing.
- Name the holder, ideally a neutral title or escrow company.
- Set realistic contingency timeframes for inspections, loan approval, appraisal, and title review.
- Avoid waiving contingencies unless you fully understand the risks and have lender and agent guidance.
After acceptance
- Deliver your deposit on or before the deadline and get a dated receipt.
- Track every contingency deadline and send any notices in writing before they expire.
- Keep documentation such as inspection reports, lender communications, and appraisals.
If issues come up
- Follow the contract’s notice and dispute‑resolution procedures closely.
- Communicate quickly with your agent, the title company, and your lender.
- Many disputes resolve through negotiation or mediation, so keep your documentation organized.
At closing
- Expect your earnest money to appear on the closing statement and be applied to your down payment or closing costs.
Tips for Salt Lake County sellers
- Confirm in writing who is holding the earnest money and that it was delivered on time.
- Consider requiring a meaningful deposit when multiple offers are likely.
- If a buyer defaults after contingencies are removed, review your contract remedies promptly and consult your agent on next steps.
- Work with the title/escrow holder to execute any required release or disbursement instructions quickly.
Common pitfalls to avoid
- Overcommitting: Offering a large deposit you cannot comfortably fund or risk.
- Missing deadlines: Letting inspection, financing, or appraisal dates pass without written action.
- Waiving protections blindly: Removing contingencies without clear backup from your lender and agent.
- Misrouting funds: Paying the wrong party or without a clear receipt and confirmation.
- Poor documentation: Failing to keep records of deposits, notices, and reports.
Quick buyer checklist
- Get pre‑approved by a lender before you shop.
- Pick a realistic earnest money amount with your agent’s input.
- Put the deposit amount, due date, holder, and all contingency timelines in your offer.
- Fund the deposit on time and obtain a dated receipt.
- Track deadlines and send any required notices in writing.
- Prefer a neutral title or escrow holder and confirm proper deposit into trust.
Ready to write a stronger offer?
If you want clear, step‑by‑step guidance on earnest money and offer strategy in Salt Lake City, you’re in the right place. With local expertise and a calm, transparent approach, we’ll help you choose the right deposit, protect your contingencies, and move from offer to closing with confidence. When you’re ready, reach out to Hannah Smith to get started.
FAQs
How much earnest money should I offer in Salt Lake City?
- A common range is 1% to 3% of the price, with 3% to 5% used in more competitive situations. Flat deposits of $2,000 to $10,000 are also common for entry‑level homes.
When is earnest money due after an accepted offer in Utah?
- Your contract controls the deadline, but a typical window is 24 to 72 hours after mutual acceptance. Always fund on time and get a receipt.
Who holds earnest money in Salt Lake County transactions?
- A neutral title or escrow company often holds the funds, though a broker’s trust account may be used. Your contract should name the holder.
If my loan falls through in Utah, can I get my earnest money back?
- Usually only if you terminate under the financing contingency, follow notice rules, and provide any required documentation within the deadline.
What happens if the seller refuses to release my earnest money in Utah?
- The escrow holder follows the contract and dispute provisions; parties often negotiate or use mediation or arbitration. Title companies typically need mutual instructions or a legal directive to disburse.
Does earnest money go toward my down payment at closing in Utah?
- Yes. If the transaction closes, your earnest money is typically credited to your buyer funds on the closing statement and applied to your down payment or closing costs.
