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A release of earnest money form is a signed escrow payout instruction. The buyer, the seller and the escrow agent sign it after a purchase contract ends or changes. Buyers and sellers need one, especially when a deal falls through before closing.
This page covers what the release includes, when the deposit goes back to the buyer, which statutes return it, and how to fill out, sign and send the form.
Key facts
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A release of earnest money is a written agreement in which the buyer and the seller tell the escrow agent to pay out the earnest money deposit, in full or in parts, after their deal ends or changes.
Earnest money is the deposit a buyer puts into an escrow account to show a serious intention to buy the seller's real estate. The deposit gives the seller some security while the deal moves toward closing. The release settles where that money goes when closing does not happen as planned.
The escrow agent is the neutral holder of the deposit, often a title company, a broker or an attorney named in the purchase contract, and it pays the money out on the parties' joint instruction. When an earnest money deposit is given to an agent or broker, this person becomes an escrow agent, and the deposit is put in an escrow account.
The release ends the escrow arrangement, while an earnest money receipt starts it: the receipt confirms that the buyer paid the deposit, and the release says who gets it at the end.
A release of earnest money form includes the parties, the original contract, the deposit amount and the payout split, followed by a signature block for the buyer, the seller and the escrow agent.
The release names the buyer, the seller and the escrow agent, each with a mailing address. The names let the escrow agent match the release to the deposit it holds.
The release identifies the deal by the date of the original purchase contract and the street address of the property. These two entries tie the release to one deposit.
The payout section of the release lists each recipient, the buyer, the seller or another payee, and the dollar amount each one receives. The split can send the whole deposit to the buyer, the whole deposit to the seller, or part to each, as the parties agree.
The release of claims is the clause that holds the parties harmless from liability under the original purchase agreement once the deposit is paid out as the form directs.
Each signature block on the release has a By line for the signature and lines for a printed name and title. The release often travels with other deal papers, such as an earnest money addendum or another addendum to the real estate purchase contract.
A Texas release of earnest money does the same job as any release: it tells the escrow agent holding the deposit how to pay it out after a Texas purchase contract ends.
Searches for this form in Texas name the forms of the Texas Real Estate Commission (TREC) and Texas REALTORS (TAR). The FormsPal release is a general form, not a TREC or TAR form. When the Texas contract names its own release form, the parties use the form it names. Some Texas buyers also call the purchase contract itself the earnest money contract.
Under Tex. Prop. Code § 5.008, if a contract is entered without the seller providing the required disclosure notice, the purchaser may terminate the contract for any reason within seven days after receiving the notice.
Tex. Prop. Code § 5.008 covers a seller of residential real property comprising not more than one dwelling unit, and it does not apply to listed transfers, such as one under a court order or foreclosure sale, one from one co-owner to another, or one to or from a governmental entity.
The termination rule of Tex. Prop. Code § 5.008 does not address the earnest money itself, so the release still settles who receives the deposit.
The release returns the deposit to the buyer when the contract ends under a contingency or the seller's default, and the buyer gave notice before the deadline the contract sets.
A contingency is a condition in the contract that lets a party end the deal when the condition is not met. Read the contingency clauses and termination terms of your own contract before you act.
An inspection contingency lets the buyer end the contract when the inspection or due diligence finds a problem, such as a title or land survey error, as long as notice reaches the seller before the inspection period ends. The contract, not the release, sets how long that period lasts.
A financing contingency lets the buyer end the contract and recover the deposit when the buyer cannot obtain the loan by the date the contract sets. Without that contingency, a failed loan can cost the buyer the deposit.
An appraisal contingency returns the deposit to the buyer when the home appraises below the agreed price and the seller does not lower the price.
A defect the seller did not disclose can give the buyer a way out with the deposit, and several statutes return the deposit when the buyer ends the deal over the seller's disclosure (see the table below). More often, defects found at inspection lead to a lower price rather than a cancelled sale.
When the seller ends the deal without a contract right to do so, the earnest money goes back to the buyer.
A final walkthrough lets the buyer check that agreed repairs were made, and unmade repairs can let the buyer end the contract and recover the deposit. A buyer who backs out only because finished repairs fall short of personal taste risks losing the deposit to the seller.
The seller usually keeps the earnest money when the buyer backs out without a contract right, such as after a contingency deadline has passed.
Several statutes return the buyer's deposit when the buyer ends the deal over the seller's disclosure, and each rule applies only under the condition shown in its row. Under Haw. Rev. Stat. § 508D-5 and Or. Rev. Stat. § 105.475, the buyer may rescind or revoke within a review period after any delivery of the disclosure statement (fifteen calendar days in Hawaii, five business days in Oregon); the Louisiana, Mississippi, Ohio, Virginia and Wisconsin rows are late or missing disclosure rules.
| State | When the buyer gets the deposit back, and the section |
|---|---|
| Hawaii | Under Haw. Rev. Stat. § 508D-5, when the buyer rescinds under the section's rescission right, the rescission is without loss of deposits, which are returned to the buyer immediately. |
| Louisiana | Under La. Rev. Stat. § 9:3198, when the purchaser terminates a contract or withdraws an offer under the chapter, the termination is without penalty and any deposit or earnest money is promptly returned. |
| Mississippi | Under the Mississippi Real Estate Commission, Property Condition Disclosure Statement (PCDS) form (rev. 04-19-2023), implementing Miss. Code Ann. §§ 89-1-501 to 89-1-527, if the seller did not deliver the disclosure statement before the buyer signed, the buyer may terminate with a full return of earnest money by written notice within 3 days after in-person delivery or 5 days after mailing of the statement. |
| Ohio | Under Ohio Rev. Code Ann. § 5302.30, when the buyer rescinds the transfer agreement for residential real property, the buyer is entitled to the return of any deposits, and the seller shall return them. |
| Oregon | Under Or. Rev. Stat. § 105.475, if the buyer revokes the offer under the section, the buyer is entitled to immediate return of all deposits delivered to any party or escrow agent, and the offer is void. |
| Virginia | Under Va. Code Ann. § 55.1-709, if the disclosures arrive after ratification and the purchaser terminates in compliance with the chapter, the termination is without penalty and any deposit is promptly returned. |
| Wisconsin | Under Wis. Stat. § 709.02, if the buyer does not receive the report within 10 days, the buyer may rescind by written notice within 2 business days after that period and is entitled to the return of any deposits. |
Other states have no deposit return rule in the sources this page draws on. There, the purchase contract and the parties' signed release decide where the deposit goes.
The release process moves through a contract check, a written notice, the signed release and delivery to escrow, and each step leaves a paper trail the escrow agent can rely on.
Check the purchase agreement. Read the contingency and termination terms, and confirm that the deadline for your reason has not passed.
Send written notice. Tell the other party in writing that you are ending the contract and why, by the notice method the contract names.
Agree on the split. Settle with the other party who receives the deposit and how much each one gets.
Fill out the release. Enter the release date, the parties, the contract date, the property address, the deposit amount and each payee's share.
Sign the release. Have the buyer and the seller sign, then ask the escrow agent to sign its block. Ask an attorney if any wording in the release is unclear.
Deliver it to the escrow agent. Send the signed release to the escrow or title company and ask when it will pay out.
Before you send the release, gather these items in one folder:
The template takes entries in five places, from the date and parties on the first page to the signature blocks at the end. The form runs two pages, and each step below matches one part of it, from the first page to the signature blocks.
The screenshots under each step show the FormsPal Release of Earnest Money Contract template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Opening paragraph: date and parties. Enter the date of the Release, then the name and mailing address of the Buyer, the Seller and the Escrow Agent who holds the deposit.
Recitals: the Agreement and the Deposit. Enter the date of the original purchase contract, the street address of the property and the amount of the earnest money deposit held in escrow or trust.
Section 1: who receives the Deposit. Check the box for each recipient, Buyer, Seller or another payee, and write the dollar amount for each. If you use the third line, add the payee's name. Sections 2 to 5 that follow are fixed text with nothing to fill in.
Signatures: Buyer and Seller. Under BUYER and SELLER, each party signs on the By line and prints a Name and Title.
Signatures: Escrow Agent. The Escrow Agent signs on the By line and prints a Name and Title under ESCROW AGENT.
A release signed by only one party usually does not let the escrow agent pay out the deposit, unless the purchase contract sets another way to release it, so a seller who refuses to sign can leave the money in escrow until the dispute ends. An escrow agent is responsible for the earnest money release once the parties provide written permission to do that, or there is a respective court order.
Reread the contract. Find its default, dispute and mediation terms.
Send a written demand. Ask the seller to sign the release and name the contract term you rely on.
Ask the escrow agent. Find out how it handles a disputed deposit.
Talk to a real estate attorney. Get advice before the dispute goes further.
The buyer, the seller and the escrow agent sign it. The template ends with three signature blocks, one for each person named on the first page. Each block has space to sign and to print a name.
The release form has no notary block, and the signatures of the buyer, the seller and the escrow agent complete it.
Nevada sets a stricter rule for a related step: a rescission under Nev. Rev. Stat. § 113.150(3) is effective only if made in writing, notarized and served not later than 4 working days after the purchaser is informed of the defect.
The release form sets no payout date, and the escrow agent pays out on its own schedule after it receives the release signed by every party.
When a buyer rescinds under them, La. Rev. Stat. § 9:3198 and Va. Code Ann. § 55.1-709 call for prompt return of the deposit, and Haw. Rev. Stat. § 508D-5 and Or. Rev. Stat. § 105.475 call for immediate return.
An escrow release form is the broader name for a signed instruction that lets an escrow holder pay out funds, and a release of earnest money is the version for a home purchase deposit.
A Colorado deal uses the release form its purchase contract names, when it names one. The sources this page draws on hold no Colorado rule on returning earnest money.
Keep a signed copy of the release with your records. Then send the signed release to the company that holds the earnest money.
General information, not legal or tax advice.
