Are you hearing “earnest money” and “escrow” and wondering if they mean the same thing? You are not alone. These terms come up fast once you start writing offers in Boca Raton, and getting them right can protect your deposit and your deal. In this guide, you’ll learn the difference, how deposits are held in Palm Beach County, typical timelines, and how to keep your money safe. Let’s dive in.
Earnest money vs escrow: simple definitions
What is earnest money?
Earnest money is your good‑faith deposit submitted after your offer is accepted. It shows the seller you are serious. If the sale closes, your deposit applies to your purchase price. If you default outside allowed contingencies, the seller may be entitled to keep it under the contract’s remedies. Buyers usually deliver funds by wire or certified check and receive a written receipt.
What is escrow in a purchase?
Escrow is the neutral holding of funds by a third party, such as a title company, closing agent, law firm, or sometimes a broker. The escrow holder keeps your earnest money safe until closing, cancellation, or a written agreement or court order directs how to release the funds. In Boca Raton, most offers name a title company as the escrow agent.
How lender escrow is different
People also use “escrow” to describe a mortgage servicer account for taxes and insurance. That is a separate, ongoing account set up after closing. Your earnest money escrow is a short‑term holding for the purchase. Do not confuse the two.
Who holds your deposit in Boca Raton
Title companies and closing agents
In South Florida, title companies and closing agents commonly hold earnest money. Your agent will help you select a reputable firm and include that company’s name in your contract. You will wire or deliver the deposit to the title company and receive a deposit acknowledgment.
Brokers as escrow holders
Florida brokers may hold escrow if they maintain proper trust accounts and follow state rules. Many brokerages choose not to hold funds and instead direct buyers to a title company for escrow.
What rules protect your funds
Florida law and standard Florida Realtors/Florida Bar contract language require escrow funds to be held in trust with accurate recordkeeping. Escrow agents must avoid commingling and follow clear dispute procedures. These protections help ensure funds are handled safely until the deal closes or the parties agree on release.
Typical amounts and timelines in Palm Beach County
How much is typical?
There is no legal minimum. The amount is negotiable and shaped by price point and competition:
- Entry or modest deals: about $1,000 to $5,000.
- Many single‑family homes in competitive segments: around 1% of the price or $5,000 to $20,000.
- Higher‑end properties: larger deposits, sometimes several percent of the price.
A larger deposit can strengthen your offer, but it also increases your exposure if you default. Balance strength and risk with your agent’s guidance.
Deadlines you should track
Standard Florida contracts often use these common windows, which are negotiable:
- Initial deposit delivery: often due within three business days of the effective date.
- Inspection period: commonly 7 to 15 days.
- Financing approval: commonly 21 to 30 days for loan commitment.
- Appraisal timing: usually follows lender timelines.
- Condo/HOA document review: often 10 to 15 days in practice, depending on your contract.
At closing, the escrowed deposit becomes part of your funds to close.
Proof of deposit and delivery method
Sellers may ask for proof that you delivered the deposit on time. Plan to provide a wire confirmation or bank receipt along with the escrow agent’s written acknowledgment. Confirm wiring instructions by phone using a trusted number.
Buyer protections and when deposits are refundable
When you can get it back
Your deposit is typically refundable if you cancel within a valid contingency period. Common protections include inspection, financing approval, appraisal, title issues, or condo/HOA document review. If the seller cannot deliver clear title or otherwise breaches the contract, you may also be entitled to a refund under the contract terms.
When the seller may keep it
If you default after contingencies expire, the contract may allow the seller to retain the escrowed deposit as liquidated damages. This depends on the contract language and the facts of the default.
How disputes get resolved
If both sides agree in writing, the escrow agent will release funds per those instructions. If not, many contracts require mediation or arbitration, or the parties may go to court. The escrow agent can also file an interpleader action that asks a court to decide who gets the funds.
Special notes for condos and HOAs
Document review rights and timelines
Boca Raton has many condominiums and communities with associations. Standard Florida contract forms typically provide a period to review condo or HOA documents. Use that window to evaluate budgets, assessments, rules, and restrictions. If the documents are not acceptable, you can cancel within the stated period to protect your deposit.
What to request up front
Before you waive any rights, confirm the exact document review timeline in your offer. Ask the seller or listing agent when and how the documents will be delivered, and keep written proof of receipt. The clock often starts when you receive the documents, so clarity matters.
Step‑by‑step: handling your deposit
Before you offer
- Set a deposit strategy that fits your risk tolerance and the market.
- Choose a reputable title company to hold escrow.
- Confirm how you will deliver funds and how you will document receipt.
In your contract
- Name the escrow agent and include contact details.
- Specify the deposit amount and delivery deadline in business days.
- Define inspection, financing, appraisal, and condo/HOA review periods.
- Require a written receipt for the deposit.
After acceptance
- Wire or deliver funds on time and save confirmation.
- Get a written deposit acknowledgment from the escrow agent.
- Track every contingency deadline on a shared calendar.
- For loans, provide documents quickly to meet the financing timeline.
If a dispute arises
- Communicate in writing with the seller and escrow agent.
- Follow the contract’s mediation, arbitration, or litigation process.
- Contact your attorney or agent for guidance on next steps.
Wire fraud safeguards
- Call the title company using a trusted phone number to verify wiring instructions.
- Do not rely on email links or phone numbers inside an unexpected message.
- Send a small test call to confirm details before wiring large sums.
- After sending, confirm receipt with the escrow agent immediately.
Buying in Boca Raton should feel exciting, not stressful. With a clear plan for your earnest money and escrow, you can write stronger offers and protect your funds every step of the way. If you want a process‑driven path from offer to closing, connect with Thomas Pidgeon for local guidance tailored to your goals.
FAQs
What is earnest money in a Boca Raton home purchase?
- It is your good‑faith deposit applied to your price at closing and held in escrow by a neutral third party until the deal closes or cancels.
Who usually holds earnest money in Palm Beach County?
- A title company or closing agent commonly holds the funds, though a broker may hold escrow if they maintain a trust account.
How much earnest money do buyers typically put down?
- Many offers include about 1% of the price or $5,000 to $20,000, while higher‑end properties often require larger deposits.
When is my deposit due after offer acceptance?
- Standard contracts often call for delivery within three business days of the effective date, though the timeline can be negotiated.
Can I get my deposit back if I cancel?
- Yes, if you cancel within valid contingencies such as inspection, financing, appraisal, title, or condo/HOA document review, or if the seller breaches.
What happens if we disagree about releasing escrow funds?
- If there is no written agreement, the contract may require mediation or arbitration, or the escrow agent may seek a court decision through interpleader.
