What Is Earnest Money? Arizona Rules and Refunds (2026)
Earnest money is the deposit a buyer puts down when their offer is accepted, showing they are serious. ClozeEZ never holds it: on a ClozeEZ sale the deposit goes to the licensed title/escrow company, as in any Arizona transaction. In Arizona it is typically around 1% of the purchase price, about $4,500 on a $450,000 home, held by the title/escrow company, never by the seller. It is not an extra cost: at closing it credits toward the buyer's down payment and closing costs. If the buyer cancels within a valid contingency, they get it back; if they walk without one, the seller may claim it.
How much, and who holds it
There is no legal minimum; the amount is whatever the offer proposes and the parties agree to. Around 1% is common in Arizona; hotter competition pushes it higher. A larger deposit signals commitment and strengthens an offer without changing the price.
The check or wire goes to the escrow agent (the title company), which holds it in trust from acceptance until closing. Sellers should never hold a buyer's earnest money directly, and a legitimate buyer will never be asked to hand it to the seller.
When the buyer gets it back, and when they don't
The purchase contract's contingencies control refunds. Under Arizona's standard contract, a buyer who cancels properly within the inspection period (via the BINSR), or under a financing or appraisal contingency, is typically entitled to their earnest money back. The deposit is protection for both sides, not a trap.
If the buyer simply walks away with no live contingency, the seller can pursue the earnest money as the agreed remedy for the breach. That is the deposit doing its job: compensating the seller for time off market.
What sellers should look at in the earnest line
Read the deposit as a seriousness signal alongside the offer price: a strong price with a token deposit and long contingency windows is weaker than it looks. Confirm the deposit is actually received by escrow within the contract's deadline; an unfunded deposit is a red flag worth acting on early.
On a ClozeEZ sale this all works exactly as it does in any Arizona transaction: the deposit sits with the escrow agent, follows the contract's contingency rules, and credits the buyer at closing.
Frequently asked questions
How much is earnest money in Arizona?
Commonly around 1% of the purchase price, though it is fully negotiable, roughly $4,500 on a $450,000 home. Competitive situations often see more.
Who holds the earnest money?
The escrow agent, in Arizona the title company, holds it in trust. It should never be paid directly to the seller.
Does the buyer lose earnest money if the deal falls through?
Only if they cancel outside their contract protections. Canceling properly during the inspection period or under a financing or appraisal contingency typically returns the deposit; walking away without a live contingency risks forfeiting it to the seller.
Is earnest money an extra fee?
No. At closing it is credited to the buyer; it becomes part of their down payment and closing costs rather than money paid on top.