Updated: 6/2/23

In the context of real estate transactions, a title company plays a crucial role, particularly in handling escrow. When a buyer makes a purchase offer, they are often expected to include an earnest money deposit. This deposit serves as a demonstration of the buyer's serious intent to purchase the property. Once the offer is accepted and the purchase contract is signed, this money is deposited in escrow, typically held by a title company.

The Escrow Process

The escrow process is a critical part of a real estate transaction. If all goes well and the sale proceeds as planned, the earnest money held in escrow is applied towards the down payment and closing costs of the sale. However, if the deal falls through for any reason, the title company's role becomes even more significant.

In such a scenario, the title company freezes the funds in escrow. It then reviews the terms of the purchase agreement to determine whether the buyer is entitled to get the earnest deposit back.

Contract Cancellation and Escrow Funds

The cancellation of a contract can occur due to a variety of reasons. Perhaps the seller fails to fulfill the terms of the purchase contract, or there's an issue with the appraisal or inspection. Alternatively, the buyer may be unable to secure the necessary financing to finalize the sale.

In any of these cases, unless otherwise stated in the contract, the buyer would typically be entitled to a refund of the deposit. The exact amount returned may vary, as there's often a cancellation fee deducted from the earnest deposit.

Dealing with Refusal of Fund Release by the Title Company

Despite the terms of the contract, there may be instances where a title company refuses to release the buyer’s funds. If you find yourself in such a situation, it's advisable to consult with a real estate attorney. Legal action may be necessary to ensure the interests of the buyer are protected and the funds are rightfully returned.


Stephen K. Hachey P.A. Stephen K. Hachey P.A.
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