If the earnest money doesn’t get deposited on time, can the contract be canceled? Can a buyer lose the deal—or worse, get sued? Utah’s Real Estate Purchase Contract (REPC) spells out deadlines that matter, and missing them can have real legal consequences. Whether you’re a real estate agent, buyer, seller, or investor, you need to understand how earnest money works in Utah—and what happens when it’s late.
What Is Earnest Money in Utah Real Estate?
Earnest money is a deposit the buyer gives as a sign of good faith when entering into a real estate contract. Under Utah’s standard REPC, this deposit is usually held in trust by the brokerage and must be delivered within a specific time—typically four calendar days after acceptance of the offer, unless otherwise agreed.
The earnest money:
- Shows commitment from the buyer
- Is applied toward the purchase price at closing
- Can be forfeited if the buyer breaches the contract
Failure to deposit it on time can jeopardize the entire transaction.
What Happens If It’s Late?
If the buyer misses the deadline for depositing earnest money, the seller may have legal grounds to cancel the contract. Under Section 8.1 of the REPC, the seller can deliver a three-day notice to cure. If the buyer doesn’t fix the issue (by depositing the earnest money) within those three days, the seller has the right to cancel the contract.
In some cases, the seller may not even issue a notice to cure. If the deposit never arrives, they may argue that the contract was never properly formed—or that the buyer breached. This opens the door to disputes, delays, or lawsuits, particularly if the market has changed and the property has lost value or a better offer comes in.
What If the Agent or Title Company Caused the Delay?
Responsibility for timely deposit usually falls on the buyer or their agent. But if a brokerage or title company mishandles the funds or delays depositing them, that may not protect the buyer from breach claims. Buyers should always get written confirmation of deposit delivery, and agents should document every step.
If you’re a brokerage or agent handling funds, Utah Division of Real Estate rules require:
- Prompt deposit into a trust account
- Accurate recordkeeping
- Timely communication with clients
Failing to follow these rules can trigger disciplinary action and civil liability.
Can the Seller Keep the Earnest Money?
Not automatically. Even if the buyer is late or ultimately defaults, the seller generally can’t just take the money without a written release or court order. Disputes over earnest money are common in Utah, especially when deals collapse over financing, inspections, or performance delays.
If both parties don’t agree on the release, the trust holder (usually the brokerage or title company) must hold the funds until:
- Both parties sign a written release, or
- A court orders the release of the funds
This is why clear documentation, proper deadlines, and communication are critical to avoiding conflicts.
Avoiding Problems: Best Practices
Whether you’re a buyer, seller, or agent, you can reduce the risk of disputes over earnest money by following these tips:
- Review deadlines in the REPC carefully and track them.
- Confirm delivery and deposit of funds in writing.
- Issue notices promptly if the other side breaches or misses a deadline.
- Keep communication clear and documented.
- Seek legal counsel early if a dispute arises.
Closing Thoughts
Late earnest money deposits can derail a deal fast. Don’t assume it’s a minor detail—it’s a contractual obligation with real consequences under Utah law. If you’re navigating a dispute over earnest money or want help drafting airtight purchase agreements, Duckworth Legal Group is here to help.
Need legal help with a real estate contract or earnest money dispute?
📞 Call us at 801-882-7444 or email us to schedule a consultation.