What happens to the deposit funds when an offer to purchase is not accepted by the seller?

When an offer to purchase is not accepted by the seller, the appropriate action is to return the deposit funds to the buyer. This reflects the standard practices in real estate transactions where the earnest money deposit – typically a good faith payment made by the buyer – is contingent upon the acceptance of an offer. If the seller does not accept the offer, there is no binding agreement, therefore the buyer retains their rights to the deposit, and it must be refunded in full.

In a typical transaction, the funds are held by an escrow agent until the terms of the purchase agreement are fulfilled. If no agreement is reached, the escrow instructs the return of the deposit to the buyer. It is important for both buyers and sellers to understand that a non-accepted offer does not create any legal obligation that would allow the seller to keep the deposit funds. This safeguards the interests of the buyer and fosters a fair negotiation process.