Things to Know: Earnest Money Disputes
1. Your earnest money deposit will be deposited with the Escrow Company or Title Company
handling your transaction. The escrow/title company is a neutral third party that follows the buyer
and seller’s joint escrow instructions.
2. Your agent and broker have no authority over the escrow/title company. Therefore, neither your
agent nor your broker has authority to direct the payment of the earnest money.
3. If your transaction is cancelled for some reason, your right to the earnest money will depend on
whether there was a default under the contract and if so, who is the party in default.
4. A default is defined as: The omission or failure to perform a legal or contractual duty; failure to
observe a promise or discharge an obligation.
5. Your contract contains several terms and obligations imposed upon each party (buyer and seller)
to the contract. When you do not perform the terms of your contract you may be deemed in
default.
6. Your contract contains a default provision that you should be familiar with because it will dictate
what happens in the event buyer or seller defaults under the contract. It also mentions what will
happen to the earnest money in the event of a default.
7. Neither the escrow company nor your agent has the authority to decide who defaulted under the
contract. Only a court of law can make that decision.
8. If a dispute arises regarding who is entitled to the earnest money, an escrow/title company will
usually hold the money until buyer and seller reach a mutual written agreement or the escrow/title
company is presented with a court order directing payment.
9. If, in your contract, you agreed to mediate, you must pursue mediation before the Greater Las
Vegas Association of REALTORS®. If mediation fails, you may then pursue a court action.
10. If mediation failed to settle the matter, or you have no obligation to mediate you may pursue the
other party in court (usually small claims – up to $7,500).
11. Small Claims actions are under the jurisdiction of the Justice Court. You may obtain forms and
proper procedures by visiting their office on the second floor of the Clark County Courthouse, 200
S. Third Street. To find out more information and get the filing guidelines please visit the
following website: http://www.clarkcountycourts.us/lvjc/small-claims.html#smallclaimsfilingguidelines
12. If the court hears the matter and concludes you are entitled to the earnest money, it will enter a
judgment in your favor. Then you can present that judgment to the escrow company, which will
honor it.
This is not legal advice. If you have any questions regarding your legal rights, you should seek the advice of any attorney.