Making an Offer

Earnest Money in Utah: How It Works and How to Protect It

Read time: 6 minutes Updated: 2026

Earnest money is your good-faith deposit that shows the seller you're serious about buying their home. Understanding how much to offer, who holds it, what makes it refundable, and when you risk losing it is essential to protecting your cash when making an offer in Utah.

What Earnest Money Is

Earnest money is a deposit you include with your offer to show the seller you're genuinely interested in purchasing their home. It's a show of good faith. The money is held by a neutral third party, typically the title company or a real estate brokerage escrow account, not by the seller directly.

Think of earnest money as a commitment. You're putting money on the table to demonstrate that you're a serious buyer, not just someone making offers on every house. This deposit is eventually credited toward your down payment or closing costs at closing, so it's not an extra expense beyond what you'd pay anyway.

How Much Earnest Money to Offer

Earnest money in Utah typically ranges from 1 to 3 percent of the purchase price. On a $400,000 home, that would be $4,000 to $12,000. There is no fixed rule, and the amount is negotiable.

In competitive markets or when competing against multiple offers, buyers often offer 2 or 3 percent to strengthen their offer and show serious intent. In slower markets, 1 percent may be acceptable. Your real estate agent can advise you on what's competitive in your area and what amount makes sense for your situation.

Who Holds Your Earnest Money

Your earnest money must be held by a neutral third party, not by the seller, their agent, your agent, or anyone with a financial interest in the transaction. Typically, the title company holds it in an escrow account, or a real estate brokerage may hold it in trust.

The escrow holder cannot release your money without written permission from both you and the seller, or a court order if there's a dispute. This protects you because you know the money is safe and won't be misused.

When It's Delivered

The Utah REPC (Real Estate Purchase Contract) specifies a deadline for when earnest money must be delivered, typically within 3 days of contract acceptance. Never deliver earnest money directly to someone you don't know or haven't verified. Wire fraud is common in real estate transactions, so always confirm wiring instructions by phone with the title company before sending money.

When You Get It Back (Fully Refundable Scenarios)

Your earnest money is fully refundable if you cancel under certain conditions before their deadlines pass. Here are the main scenarios:

Inspection Contingency

If you cancel within the inspection deadline (typically 10-14 days in Utah), you get your earnest money back no matter the reason. You could find a structural issue, decide you don't like the neighborhood, or simply change your mind. During this window, you're protected.

Financing Contingency

If your lender denies your loan application before the financing deadline, you can cancel and get your earnest money back. The contingency deadline is typically 21-30 days. You must cancel in writing within this window to protect yourself.

Appraisal Contingency

If the home appraises for less than the purchase price and you cancel within the appraisal deadline, you get your earnest money back. You have options: you can renegotiate the price, pay the difference, or cancel. If you cancel, your earnest money is refundable.

Seller Default

If the seller cannot perform or breaches the contract, your earnest money is refundable and you can cancel without penalty.

When You Can Lose Your Earnest Money

Your earnest money is at risk if you cancel outside of the protected contingency windows. Here are the main ways you can lose it:

• You cancel after all contingencies have expired (inspection, financing, appraisal deadlines have passed)
• You waive your contingencies in writing and then cancel later
• You miss the settlement/closing date without an extension agreed upon in writing
• You breach the contract in some other way

Once your inspection deadline passes, you're committing to move forward absent a financing or appraisal problem. If you get cold feet and cancel after that deadline, the seller can keep your earnest money as compensation for taking their home off the market.

The Inspection Deadline and Your Deposit

The inspection deadline is your most important protection. Before this deadline expires, you can cancel for any reason and your earnest money is returned in full. You can hire an inspector, review their findings, negotiate repairs or credits with the seller, or decide to walk away entirely.

After this deadline passes, you lose this flexibility. If you cancel after the inspection period without a valid reason (like a lender denial or low appraisal), the seller can claim your earnest money as liquidated damages for the time their property was off the market.

What Happens If Both Parties Dispute the Earnest Money

If you and the seller disagree about who should get the earnest money (for example, you claim you cancelled within the inspection period, but the seller says you didn't), the escrow holder cannot release the money without written agreement from both parties.

In that case, the earnest money sits in escrow until both parties sign a release agreement or a court issues an order. This protects you from the seller simply claiming your deposit without justification. Resolution can take time and may require legal action.

How Earnest Money Differs From Your Down Payment

Earnest money and your down payment are different things, though they work together.

• Earnest money is a small deposit (1-3% of purchase price) included with your offer
• Down payment is the percentage of the home price you contribute in cash at closing (typically 3-20%)
• Your earnest money is credited toward your down payment at closing
• Earnest money is not an extra cost; it counts toward what you're already paying

If you offer $10,000 in earnest money on a $400,000 home and plan to put down 10 percent (which is $40,000), that $10,000 gets applied to your down payment. You'd bring $30,000 more to closing, for a total down payment of $40,000.

Earnest Money Scenarios

Key Takeaways