Earnest Money Deposits in California
Your earnest money deposit shows the seller you're serious. Here's when it's due, how to send it safely and what happens to it.
Last updated November 2026
What the deposit is
The deposit is money you put into escrow after your offer is accepted. At Cloud Escrow, escrow funds are held in a trust account.
When it's due
The initial deposit is delivered to escrow within 3 business 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.
How to send it safely
You can send your deposit by wire or by check. Before you wire money, confirm the instructions by phone.
Cloud Escrow never sends or changes wire instructions by email. Before you send money, call us at (949) 991-2345 using a number you already know.
What happens to it at closing
Your deposit is credited to you on your closing statement. It lowers the cash you bring to close.
When you can get it back
Your contingencies, such as investigation, loan and appraisal, give you the right to cancel for the reasons they cover. In the standard RPA they run 17 days after acceptance.
Once you remove your contingencies in writing, the liquidated damages clause may apply if you don't close.
For a home of 1–4 units the buyer intends to live in, a forfeited deposit of 3% of the price or less is presumed valid. More than 3% is presumed invalid unless shown to be reasonable (Civil Code §1675).
The RPA caps the amount kept at 3%. Both buyer and seller must separately initial the liquidated damages clause (§1677).
Releasing a deposit after a cancellation
To cancel, buyer and seller sign mutual cancellation instructions.
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.
Earnest money FAQ
When is the earnest money deposit due in California?
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Under the standard RPA, the initial deposit is delivered to escrow within 3 business days after acceptance. Your contract may set a different deadline.
What happens to my deposit at closing?
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It's credited to you on your closing statement, so it reduces the cash you bring to close.
Can the seller keep my deposit?
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Only under the liquidated damages clause, if both of you initialed it. For a home of 1–4 units you intend to live in, the RPA caps the amount kept at 3% of the price.
How do I get my deposit back after a cancellation?
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Escrow releases it only with mutual signed release instructions, a court decision or an arbitration award.
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This guide is general information, not legal or tax advice. Customs vary by county, and every cost is negotiable in your purchase agreement.