Janet MatchinskyEarnest money is a transaction deposit governed by your purchase agreement and applicable law. Before sending it, confirm the amount, deadline, recipient, payment method and what the agreement says about release if the purchase ends. A larger deposit does not explain its own risk; the conditions and procedures around it do.
I recommend reviewing those details before you sign an offer. If you are preparing to buy a home, contact me so the deposit instructions and contract dates are clear before money needs to move.
Read the deposit terms before choosing an amount
Locate the provision naming the earnest money amount and when it must be delivered. Check whether it is a single payment or more than one installment. Identify the event that starts the clock, the definition of a business day if relevant, and the person responsible for confirming receipt.
Then connect the deposit to the rest of the agreement. Which contingencies remain? What notice must be given to exercise a right under those contingencies? What happens if a buyer misses a deadline? These are contract-review questions; a general rule of thumb about a deposit percentage cannot answer them.
Do not select an amount solely because it sounds competitive. Consider the cash you need for inspections and other expenses before closing, and discuss how your lender wants the source of funds documented. Keep the deposit decision within your overall home-buying budget.
Know the difference between delivery and deposit
Minnesota's broker trust-account statute says earnest money is deposited according to the parties' written agreement. If that agreement is silent on deposit timing, the statute provides a three-business-day rule tied to receipt or final acceptance, whichever is later. That is not a substitute for reading the buyer's delivery obligation in the agreement. See Minnesota Statutes section 82.75.
Ask who will hold the funds and obtain that person's or organization's verified instructions. Confirm what counts as timely delivery for the chosen method. A bank transfer being initiated and a recipient confirming funds are not necessarily the same event in the transaction's paperwork.
If you expect a bank limit, account transfer or other practical delay, raise it before the deadline. Do not assume an email explaining a delay changes the purchase agreement. Have any needed contract change handled expressly.
Use a payment checklist
Before paying, I recommend completing this short record and keeping it with the signed offer.
| Item | What to record |
|---|---|
| Amount | The exact amount required by the accepted agreement |
| Due date | Calendar date, time if specified, and triggering event |
| Holder | Legal name of the broker, closing company or agreed recipient |
| Method | Accepted payment method and verified delivery instructions |
| Confirmation | Who will acknowledge receipt and how |
| Source | Account documentation the lender requests |
| Contract version | Signed agreement and amendments that control the deposit |
After paying, save the receipt and account record. Ask the recipient to confirm the transaction and property to which the funds were applied. If something does not match, resolve it immediately rather than waiting until the closing statement arrives.
Verify transfer instructions independently
Discuss the transfer procedure with a known contact using a phone number you independently verified. Treat a sudden message changing an account or recipient as a reason to stop and call. Do not rely on the contact information supplied only in that change request.
The Consumer Financial Protection Bureau's mortgage closing scam guidance explains the risk of criminals impersonating transaction participants to redirect funds. Apply the same careful verification habits when an earnest money payment is requested.
Keep payment confirmations out of broad email chains when they contain sensitive account information. Use the recipient's approved secure channel for documents. Your agent and closing professional can coordinate the timing without circulating unnecessary banking details to everyone involved.
Separate a cancellation right from release of funds
A buyer's right to end a purchase and the holder's authority to disburse earnest money are related but separate issues. The trust-account statute limits disbursement to specified events, including closing, written agreement, qualifying statutory affidavit or court order. That is why saying you have canceled does not by itself answer when funds will arrive back in your account. See section 82.75.
When an inspection or financing issue arises, identify the actual contractual right, its deadline and the required notice. Ask what additional release paperwork is needed. Avoid treating a casual text conversation as a complete cancellation process without review of the governing terms.
If the parties disagree, obtain legal advice promptly. Minnesota also has a statutory process addressing cancellation of residential purchase agreements. The existence of section 559.217 does not mean a buyer should attempt that process without understanding how it applies to the situation.
A hypothetical inspection problem
Suppose an inspection identifies work the buyer did not expect. The buyer requests a repair credit and assumes the request pauses the inspection deadline. The seller is still considering it when the deadline approaches. The deposit issue cannot be answered simply by saying the inspection found a problem.
The relevant questions are whether the agreement allows cancellation on that basis, what notice is required, and whether the parties have changed the deadline in writing. Negotiation and preserving a contractual choice need to be managed together. Keep the deposit holder informed through the proper process after the decision is made.
Our home-inspection article explains the inspection itself. The deposit review adds the contract timetable and release process around the buyer's decision.
Track the credit at closing
When the purchase proceeds, review how the earnest money appears in the closing documents. Compare the amount against your receipts, including any later installment or adjustment. Ask about a discrepancy before signing.
The CFPB recommends reviewing closing documents in advance and resolving questions with the lender or settlement professional. Its document-review checklist is useful here. Your deposit should be part of that reconciliation, not a number you assume someone else has checked.
Use the Minnesota closing-cost guide to organize the broader cash calculation. Keep a clear distinction between money already paid, money still due and expenses paid separately outside closing.
If you change banks or the agreed payment method, tell the lender and deposit holder before acting. Keep the new instructions and the related confirmation with the original receipt so the money can be traced without reconstructing the transaction later.
Before sending the first payment
You should be able to explain where the money is going, when it is due, how receipt will be documented and which agreement controls its disposition. If any of those answers is missing, resolve it with the transaction team before paying.
Call or text (320) 219-2488 when you are ready to prepare an offer. I can help make the deposit terms and calendar understandable before you commit funds.