Understand deposit exposure before funding escrow.
Read the trigger rather than the label
Terms such as refundable, good faith or earnest money are not a complete description of the buyer's rights. Ask counsel to identify the exact events that permit return, create forfeiture exposure or require joint instructions. Distinguish technical acceptance, financing satisfaction, title clearance and closing. The escrow provider's role in holding funds is different from deciding a disputed contractual entitlement.
Track deadlines and notice methods
Record when the deposit is due, when inspection starts, when findings must be delivered and how rejection or extension notices must be sent. Confirm the parties and addresses authorized to receive notices. A substantive concern may not preserve rights if the agreed notice process is missed. Do not assume a phone call, broker text or financing delay automatically extends the contract.
Work an illustrative timing conflict
Suppose a $100,000 deposit is refundable only through a stated technical-review deadline, but the lender's collateral review finishes later. Unless the documents address the gap, the buyer may have deposit exposure while financing remains uncertain. The useful response is to negotiate aligned conditions or an extension with counsel before the deadline, not to describe the deposit as protected merely because escrow still holds it.
Verify funds instructions independently
Obtain escrow's written deposit procedure through a known contact and independently verify any new or changed wiring instructions. Keep the funding confirmation with the contract and deposit ledger. Have the team document whether a payment is part of the purchase price, a separate fee or a reserve so the acquisition cash model does not count it twice. Resolve disagreements before issuing release instructions.
Working document to prepare
Use a deposit timeline with the funding date, each refundability trigger, each notice deadline, delivery method and authorized recipient. Add the contract reference and the person responsible for monitoring it. Record extensions only after the responsible adviser confirms they are effective. Keep proof of notice and escrow acknowledgments together. The timeline should make a financing or inspection delay visible early enough to address, rather than merely record it after rights may have changed.
Your next-step checklist
- Identify every refund and forfeiture trigger.
- Record notice methods and deadlines.
- Align financing and inspection conditions.
- Independently verify wire instructions.
Sources & further reading
Primary sources support the relevant facts. Our planning questions and illustrative exercises are editorial analysis; they do not replace transaction-specific advice.
- AOPA purchase-agreement guidance · accessed 2026-10-28