When you purchase real estate in New Hampshire, an earnest money deposit serves as a financial commitment to the transaction. But if the deal falls through, disputes over that deposit can become complex. Understanding how these issues unfold will help you safeguard—or reclaim—your funds.
What is earnest money?
Earnest money is a deposit submitted alongside a signed purchase agreement. It’s typically held in escrow by a real estate agent, broker, or attorney. If the transaction proceeds to closing, the deposit applies toward your purchase. If it fails, the contract and the reason for the breakdown will determine who keeps the money.
When can disputes arise?
Disagreements typically emerge when both parties feel entitled to the deposit. If you withdraw based on a contingency—such as an unsatisfactory inspection—you may have grounds to recover your deposit. However, if the seller believes you violated the terms of the contract, they may assert their right to retain it. Ambiguous contract language often escalates these conflicts.
How are disputes resolved?
Most real estate contracts specify a resolution process. Some include mandatory mediation or arbitration clauses, while others permit litigation. If the escrow agent cannot determine the rightful recipient, they may retain the funds until receiving a signed release or a court directive. To minimize complications, your contract should clearly define the terms governing deposit disputes.
Ways to protect your deposit
Ensure the purchase agreement outlines specific conditions for refund eligibility. Preserve all written communications and adhere strictly to contractual deadlines. If you choose to terminate the deal, follow the contract’s procedures precisely. These precautions strengthen your legal position in case of a dispute.
Earnest money conflicts can intensify an already stressful transaction. By learning how New Hampshire addresses these disputes, you improve your ability to manage risks and make informed decisions.