Do You Get Your Earnest Money Back in Texas? Common Situations
Many Texas buyers assume the earnest money always comes back if the deal falls apart. It does not. Whether you get the deposit back depends on why the contract ended and whether you followed the contract's deadlines and notice requirements.
Situations where buyers usually get the deposit back
You terminate during the option period. If you paid an option fee and terminate within the option period, the contract generally entitles you to a refund of the earnest money. The option fee itself goes to the seller.
The property fails a contract contingency. Financing approval, appraisal, and similar addenda can give the buyer a right to terminate and recover the deposit, but only if the buyer sends timely notice under the addendum's terms.
The seller defaults. If the seller fails to close without a valid excuse, the standard contract allows the buyer to seek the return of the earnest money, among other remedies.
Title or survey objections are not cured. A timely, properly delivered objection that the seller does not cure can permit termination with a refund.
Situations where buyers often lose the deposit
Terminating after the option period expires without another contractual right to do so.
Missing a financing or appraisal deadline, which can waive the contingency.
Failing to close because of a change of heart or a lack of funds.
Sending the termination notice late, to the wrong party, or in the wrong form.
Why the paperwork controls the result
Texas earnest money disputes are mostly contract disputes. Courts and title companies look at the executed contract, the addenda, the dates, and proof of delivery. A buyer with a good reason for terminating can still lose the deposit by missing a notice deadline.
What if the other side will not sign the release?
Title companies and escrow agents typically will not release earnest money without a signed release from both parties or a court order. If both sides demand the money, the holder may keep it until the dispute is resolved or file an interpleader action to let a court decide.
What to do now
Gather the contract, all addenda, and every notice sent or received.
Note every deadline and the date you acted.
Do not ignore a release request without understanding what signing it means.
Talk to a Texas real estate attorney before you sign or refuse a release.
Davila Cobos Law Firm, PLLC represents buyers, sellers, and investors in San Antonio and Laredo in real estate litigation, including earnest money disputes.
This article provides general information, not legal advice, and reading it does not create an attorney-client relationship. Outcomes depend on the specific facts and contract.
