Worried about losing your earnest money when you make an offer in Draper? You are not alone. Many buyers want to be competitive without putting hard-earned cash at risk. In this guide, you will learn how earnest money works in Utah, what is typical in Draper, when deposits are refundable, and simple steps to protect your funds. Let’s dive in.
What earnest money is in Utah
Earnest money is a good-faith deposit that shows you are serious about buying a home. If the sale closes, it is usually credited toward your purchase price and closing costs. The Utah Real Estate Purchase Contract, often called the REPC, sets the rules for how your deposit is handled.
Your funds are commonly held by a neutral title or escrow company. In some cases, they may be held in a broker’s trust account as allowed by Utah regulations. No matter where it is held, you should receive written confirmation that your deposit was received and recorded.
Typical Draper deposit amounts
There is no fixed rule in Utah. In many Draper transactions, buyers put down about 1 percent of the purchase price or a flat amount in the range of 1,000 to 5,000 dollars. In more competitive situations, buyers sometimes offer larger deposits or agree to make a portion nonrefundable to stand out. Local norms shift with price point and demand, so ask your agent for recent examples in the neighborhoods you are targeting.
When you pay and where it goes
Your REPC will spell out the amount, who holds the money, and the delivery deadline. Common practice is to deliver the deposit within a short window after both parties sign the contract, often within 24 to 72 hours and sometimes up to 7 days. The exact timing is whatever you and the seller agree to in the contract.
Plan your delivery method ahead of time. If wiring funds, verify instructions by phone using known contact numbers from the title company. Keep your bank confirmation and ask for a written escrow receipt or ledger entry from the holder.
Refundable vs. nonrefundable
When deposits are typically refundable
- Inspection period: If you end the contract within the inspection window following the REPC notice rules, your earnest money is usually refunded.
- Financing: If your loan is denied and your contract has a valid financing contingency, timely termination under the REPC typically protects your deposit.
- Appraisal: If the appraisal comes in low and you terminate as allowed under the contract, the deposit is commonly refundable.
- Title issues: If the title commitment shows a defect and you cancel per the REPC, you may receive a refund.
- Seller default: If the seller breaches the contract, the REPC generally allows you to recover your earnest money.
When deposits may become nonrefundable or at risk
- Buyer default: If you fail to perform without a contractual right to cancel, the seller may be entitled to the earnest money as liquidated damages, subject to the REPC.
- Missed deadlines: Even if a contingency exists, missing a notice or termination deadline can forfeit refund rights.
- Explicit nonrefundable terms: If you agree that all or part of your deposit becomes nonrefundable after a certain date, that language controls.
REPC clauses to review closely
- Earnest Money clause: Amount, who holds it, and delivery timeline.
- Inspection and Right to Cancel: Timeframe, notice requirements, and resolution process.
- Loan Approval and Financing: Conditions, deadlines, and what happens if you cannot obtain financing.
- Appraisal provisions: How valuation issues are handled.
- Remedies and liquidated damages: What happens if a party defaults.
- Dispute resolution: Whether mediation, arbitration, or court action applies if there is a dispute over release of funds.
How to protect your deposit in Draper
Before you write the offer
- Ask your agent for recent Draper norms on earnest-money amounts for your price range.
- Decide how much risk you are comfortable with in case you consider nonrefundable terms.
Draft the contract carefully
- Specify the escrow or title company and the exact delivery deadline in the Earnest Money clause.
- Set clear dates for inspection, financing, and appraisal contingency periods. Avoid vague start dates.
- If offering nonrefundable terms, write them clearly. Note any portion that remains refundable under specific contingencies.
Deposit and documentation
- Deliver funds to the named title or escrow company, not to an individual.
- Get a written escrow receipt or ledger entry and keep your bank or wire confirmation.
- Verify all wire instructions by phone with known contacts to reduce fraud risk.
Meet deadlines and give notices
- Track all contingency deadlines on a shared calendar.
- Send required notices in the form the REPC specifies and keep proof of delivery.
- Save inspection reports, lender communications, and appraisal results in one place.
If a dispute arises
- The escrow holder typically needs a signed mutual release or a final decision before releasing funds.
- Follow the REPC’s dispute resolution path, which may include mediation or arbitration.
Local scenarios you might face
- Inspection termination with refund: You deposit funds with the title company. The inspection reveals a major issue. You send timely written notice to cancel during the inspection period. Result: the deposit is refunded per the REPC.
- Financing falls through after a missed deadline: Your loan is denied, but the financing deadline passed before you notified the seller. Result: the seller may claim default and seek the earnest money.
- Competitive offer with a nonrefundable portion: You offer a larger deposit with a part becoming nonrefundable after the inspection deadline. If you later cancel for a reason outside the contingencies, you may forfeit that portion.
New construction and competitive offers
Builder contracts may set different deposit and release schedules than a typical resale REPC. Ask for the builder’s earnest money terms in writing and review all deadlines. In multiple-offer situations, sellers may value higher or nonrefundable deposits, but you should balance competitiveness with your cash risk.
Your next step
A clear plan for earnest money can make your Draper offer stronger and safer. If you want help setting the right deposit, mapping deadlines, and coordinating secure escrow, connect with a local advisor who works these details every week. Ready to talk through your options and draft a smart offer? Reach out to Jennifer Jumbelic for calm, candid guidance.
FAQs
How does earnest money work in Utah home purchases?
- It is a good-faith deposit credited at closing, held by a title company or broker trust account, and governed by the Utah REPC’s terms and deadlines.
What is a typical earnest money amount in Draper?
- Many offers use about 1 percent of price or 1,000 to 5,000 dollars, with higher amounts in competitive situations depending on market conditions.
When is earnest money refundable under the REPC?
- If you validly terminate within inspection, financing, appraisal, or title deadlines, or if the seller defaults, the deposit is commonly refundable per contract terms.
Who holds earnest money and how do I confirm it?
- A title or escrow company usually holds it. Request a written escrow receipt or ledger entry and keep your bank or wire confirmation.
Can a seller keep my earnest money if the sale fails?
- If you default without a contractual right to cancel or miss deadlines, the seller may seek the deposit as liquidated damages under the REPC.
