Earnest Money in Maryland: A Buyer’s Guide

Confused about earnest money and how it fits into your home purchase? You are not alone. In fast-moving markets like Silver Spring, Rockville, and Frederick, this deposit can help your offer stand out and protect you at the same time. In this guide, you will learn what earnest money is, how it works in Maryland, typical deposit ranges in Montgomery County, and how to keep your funds safe. Let’s dive in.

What earnest money is

Earnest money is a good-faith deposit you submit when the seller accepts your offer. It shows you are serious while you complete inspections, financing, and other steps. If you close, the deposit is credited toward your down payment or closing costs. If the deal does not close, the contract controls whether the money is returned or released to the seller.

How earnest money works in Maryland

Who holds the funds

In Maryland, your deposit is typically placed with an agreed escrow agent. In the Montgomery County suburbs, title or settlement companies commonly hold the funds. Sometimes a listing broker holds the deposit if permitted by licensing rules.

When you pay

Most Maryland contracts set a deadline for delivering the deposit, often within 24 to 72 hours of contract ratification. You should plan to have funds ready quickly once your offer is accepted. The contract should clearly state the due date and delivery method.

How it is documented

Your contract should name the escrow agent, outline how and when funds will be delivered, and explain how the deposit will be applied at settlement. Be sure to obtain and keep a receipt from the escrow agent.

What happens at closing

If you close, the deposit appears on your settlement statement as a credit toward your down payment or closing costs. It reduces how much you need to bring to the closing table.

If the sale does not close

If the transaction terminates, the contract and any mutual release will guide where the funds go. If there is a dispute, the escrow agent will usually hold the money until both parties agree in writing or a court or similar directive orders disbursement.

When you can get it back

Common refundable contingencies

Your earnest money is typically refundable if you end the contract within the rules of these contingencies:

• Home inspection contingency
• Financing (mortgage) contingency
• Appraisal contingency
• Title or other written contingencies in your contract

How to protect your refund rights

• Watch every deadline and send all notices exactly as the contract requires.
• Give written notice to terminate within the contingency period, following the steps in your contract.
• Keep records of all notices, inspection results, and lender communications.

When you could lose it

Buyer default and seller remedies

If you fail to perform and do not have a contractual right to terminate, you risk losing the deposit. Many standard contracts include a liquidated damages clause that allows the seller to keep the earnest money as the remedy. In other cases, sellers may seek other remedies based on the contract language.

Disputed deposits

Escrow agents generally will not release funds without written agreement from both parties or a court directive. Disputes are often resolved by mutual release, mediation or arbitration if required by the contract, or litigation.

How much to offer in Montgomery County

There is no mandated amount in Maryland. Deposits are negotiated and vary with price point and competition.

• For many suburban single-family homes, deposits often range from a few thousand dollars to about 1 to 2 percent of the purchase price.
• In higher-priced or competitive areas like close-in Silver Spring and Rockville, buyers may offer 1 to 3 percent or flat amounts such as $10,000 to $25,000 to strengthen an offer.
• Cash buyers or aggressive offers may include larger deposits or shorter deposit timelines.

Focus on a number that signals commitment without straining your cash reserves. You should still have funds available for inspections, appraisal fees, and closing costs.

Smart steps before you write an offer

• Decide how much you can comfortably deposit while keeping enough cash for other costs.
• Discuss strategy with your agent. A higher deposit can make your offer stronger, but it increases risk if you cancel without a contractual reason.
• Confirm the escrow agent name and deposit delivery method.
• Make sure the contract has clear contingency language with exact notice timelines.
• Review dispute resolution and any liquidated damages clause so you understand potential outcomes.

What to do after acceptance

• Send the deposit by the contract deadline and get a written receipt.
• Track all contingency dates, especially inspection, appraisal, and financing milestones.
• Keep copies of every notice you send or receive.

If you need to cancel

• Follow the contract’s termination steps exactly and send required written notices on time.
• Coordinate with your agent and the escrow agent right away to preserve refund rights.
• If the seller claims forfeiture and you disagree, your escrow agent will usually hold funds until there is a written agreement or a court directive.

Strategies in competitive markets

If you are competing in Silver Spring, Rockville, or Frederick, consider these tactics thoughtfully:

• Offer a larger deposit to signal strength, paired with clear contingency terms and tight timelines you can meet.
• Shorten the deposit delivery window if you have funds ready.
• Avoid labeling deposits nonrefundable unless you fully understand the risk. Such terms increase exposure and are not right for every situation.

Local guidance you can trust

A well-structured earnest money plan can make your offer more compelling while protecting your budget. If you are weighing deposit size, timelines, or contingency options in Montgomery County, you deserve clear, local advice tailored to your goals. For personal guidance and a strategy that fits your situation, reach out to Myah C. Moxley.

FAQs

How much earnest money should I offer in Silver Spring or Rockville?

• Common practice ranges from a few thousand dollars up to about 1 to 3 percent of the price, depending on competition and the property.

Who holds my earnest money in Maryland?

• Title or settlement companies commonly hold deposits in our area. Sometimes the listing broker holds the funds if permitted. Your contract should name the escrow agent.

When do I risk losing my earnest money?

• You risk forfeiture if you breach the contract and do not have a contingency that gives you the right to terminate, especially if you miss deadlines or notice requirements.

Will my earnest money reduce my cash at closing?

• Yes. If you close, the deposit is credited on your settlement statement toward your down payment and closing costs.

What if there is a dispute over the deposit?

• Escrow agents typically hold the funds until both parties agree in writing or a court or similar order directs release. Many disputes resolve through mutual release or contract-based mediation or arbitration.