How to Cancel Escrow in California
Sometimes a sale falls apart. Here's how cancelling escrow works and what happens to the deposit.
Last updated November 2026
When a contract can be cancelled
A buyer can cancel for the reason a contingency covers while it's still in place. In the standard RPA, the investigation, loan, appraisal and insurance contingencies run 17 days after acceptance.
These are the defaults in the standard C.A.R. California Residential Purchase Agreement (RPA). Your own contract may set different deadlines.
If a deadline passes, the other side can deliver a Notice to Buyer (or Seller) to Perform. They may cancel only if the deadline has passed and at least 2 days have gone by after the notice was delivered.
How cancellation works in escrow
Buyer and seller sign mutual cancellation instructions. Escrow doesn't cancel on one party's request alone.
What happens to the deposit
Escrow releases a deposit only with mutual signed release instructions, a court decision or an arbitration award. It never releases it on one party's say-so.
If a dispute goes to court, the escrow holder may deposit the money with the court.
Fees and costs escrow already paid on a party's behalf, and any cancellation fee, come out of that party's funds.
For a home of 1–4 units the buyer intends to occupy, a party who doesn't sign release instructions within 30 days after a written demand, without a good-faith dispute, can owe the money plus treble damages of at least $100 and no more than $1,000, plus attorney's fees (Civil Code §1057.3).
Signing a release doesn't cancel the purchase contract unless it says so.
Cancellation fees
Escrow companies may charge for work already done. Ask about cancellation fees before you open escrow.
Cancelling escrow FAQ
How do you cancel escrow in California?
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Buyer and seller sign mutual cancellation instructions. Escrow releases the deposit only with mutual signed release instructions, a court decision or an arbitration award.
Is there an escrow cancellation fee?
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Escrow companies may charge for work already done. Fees and costs escrow already paid on a party's behalf, and any cancellation fee, come out of that party's funds. Ask before you open escrow.
What if the other side won't sign the release?
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For a home of 1–4 units the buyer intends to occupy, a party who refuses for 30 days after a written demand, without a good-faith dispute, can owe the money plus treble damages of $100 to $1,000, plus attorney's fees.
Ready to open escrow?
This guide is general information, not legal or tax advice. Customs vary by county, and every cost is negotiable in your purchase agreement.