This is Part Two of “Who Gets The Earnest Money Back”.


The title company will follow up with a notice of its own that written demand has been made and enclose a release form for signature. The release must be signed by all parties and their brokers. Although fifteen days are permitted in order to make written objection, paragraph 18.D imposes liquidated damages of three times the amount of the earnest money if a party “wrongfully” refuses to sign a release within seven days. Attorney’s fees and costs could be added to this amount as provided in paragraph 17. If the release is not signed by both parties and the earnest money is not released, what happens next depends on whether or not the remedy of mediation was checked in paragraph 16. If it was, mediation must precede the filing of litigation to recover earnest money. Filing suit prior to mediation will likely result in the court abating the case (putting it on hold) until the mediation requirement is fulfilled.


Lawsuits may be filed in Justice Court, providing the total amount claimed (including attorney’s fees) does not exceed $10,000. If total damages exceed that amount, then suit may be filed in the County Court at Law. Named defendants should include the party refusing to sign the release and the title company holding the earnest money. Title companies will usually respond by interpleading the earnest money (depositing it into the court’s account). Before filing a legal action concerning earnest money, it is important to consider the practical reality that attorney’s fees and costs, once added up, can easily exceed the amount of earnest money in dispute. As a consequence, many earnest money disputes are resolved by the parties’ splitting the funds and going their separate ways.

Be sure your Realtor properly explains this part of the contract the better understanding you have the less problems you’ll have issues come in the transaction.  If you have any questions, please do not hesitate to contact us.

Happy Trails,

Donnie  817-932-4900