Arizona earnest money.
Your deposit,
and when it is at risk.
Earnest money is the deposit an Arizona buyer puts down when an offer is accepted. Under the standard Arizona REALTORS contract, escrow or a broker's trust account holds it, not the seller, and it comes back to the buyer who cancels in time under a contingency such as the 10-day inspection period.
What earnest money is.
Earnest money is a good faith deposit. It shows the seller you intend to close, and at closing it is credited toward your down payment and costs.
There is no amount set by Arizona law. The amount is negotiated and written into the Arizona REALTORS (AAR) purchase contract, along with how it is paid: personal check, wire transfer or another method.
Held in escrow, not by the seller.
Under the AAR contract, the deposit goes to the escrow company or to a broker's trust account once the offer is accepted. The seller does not hold it.
Arizona law defines escrow as property handed to a neutral third party with no interest in it, to be released when set conditions are met (A.R.S. 6-801). An escrow agent is a trustee of the money it holds and may not mix it with its own funds (A.R.S. 6-841.01). Escrow agents are licensed by the state.
When the buyer gets it back.
The contract returns earnest money to the buyer in several situations, as long as the buyer acts within the deadlines.
- Inspection period cancellation.The buyer cancels within the inspection period, 10 days by default, and lists the disapproved items.
- Seller refuses repairs.The buyer cancels within five days after the seller's response or response deadline, whichever is first.
- Low appraisal.On a financed purchase, if the appraisal the lender requires comes in below the price, the buyer can cancel within five days after notice of the value. A cash buyer has this right only if the parties add an appraisal contingency.
- No loan approval.The buyer, in good faith, cannot get loan approval and delivers notice no later than three days before closing.
- Seller breach.The seller fails to cure a noncompliance within three days after a cure notice, a written notice that a contract duty has not been met.
When the seller can keep it.
Once the contingencies pass, the deposit is at risk if the buyer breaches. A breach is a failure to do something the contract requires that is not fixed within three days after a cure notice. Failing to bring closing funds is one example.
The contract has a liquidated damages clause. Liquidated damages are an amount the parties agree in advance to treat as a fair estimate of the seller's loss. If the buyer breaches, the seller may accept the earnest money as the seller's sole damages. In some cases the seller must accept it that way, such as when the buyer fails to give the required notice about not getting loan approval, or cannot get the loan after letting the appraisal contingency lapse.
Listing items matters
An inspection notice that does not list disapproved items is a noncompliance. If the buyer does not fix it within the cure period, the seller may claim the deposit.
Deadlines are firm
Only a signed written agreement extends a deadline. Missing a contingency deadline usually means the buyer has waived that contingency.
Contingency vs. breach
An unmet contingency is not a breach. If a buyer in good faith cannot get loan approval and gives timely notice, the deposit comes back.
If both sides claim it.
In the AAR contract, buyer and seller authorize escrow to release the earnest money under the contract terms in its sole discretion, and agree to hold escrow harmless. Escrow reviews each side's reasons and asks for proof of the notices that were delivered.
When the answer is unclear, escrow may ask both parties to sign mutual written instructions or suggest mediation, which the contract requires before arbitration or court. If a significant deposit is in dispute, talk to a real estate attorney.
Common questions
How much earnest money is required in Arizona?
No amount is set by Arizona law. It is negotiated between buyer and seller and written into the purchase contract.
Who holds earnest money in Arizona?
Under the AAR contract, the escrow company or a broker's trust account. The seller does not hold it.
Do I get my earnest money back if I cancel during the inspection period?
Yes, if you cancel in time and list the items you disapprove.
What happens to earnest money if the appraisal is low?
On a financed purchase, if the lender's appraisal comes in below the price, the buyer can cancel within five days after notice of the value and recover it. Otherwise the appraisal contingency is waived. A cash buyer has this right only if the parties add an appraisal contingency.
What if my loan falls through?
If you cannot get loan approval in good faith and give notice no later than three days before closing, the earnest money is returned.
What does liquidated damages mean here?
The parties agree in advance that the earnest money is a fair estimate of the seller's loss. If the buyer breaches, the seller may keep it as the seller's only damages.
Who decides an earnest money dispute?
Under the contract, escrow may release the funds under the contract terms in its sole discretion. Escrow may also ask for mutual written instructions or suggest mediation.
Questions about earnest money?
Buying soon? Before you write an offer, I will walk you through the dates and notices that affect your deposit. For a dispute, I will point you to a real estate attorney. If you already have an agent under contract, ask them first. Call or text 480-485-4261.
This page is general information, not legal or tax advice. Sources: the Arizona REALTORS Residential Resale Real Estate Purchase Contract (October 2022 form) from Arizona REALTORS; A.R.S. 6-801 and A.R.S. 6-841.01; Arizona REALTORS contract series by K. Michelle Lind, Esq.: Part 7b, Inspection Period and Buyer Disapproval and Part 8, Remedies; Arizona REALTORS on the loan contingency and cure period notice; and Arizona REALTORS, Five Things You Should Know About Escrow and Title. All checked 28 October 2026.