Have you heard you need “earnest money” to buy a home in Highland and wondered what that really means? You are not alone. This small deposit can shape your offer, protect your goals, and determine what happens if a deal falls through. In this guide, you will learn how earnest money works in Indiana, what is typical in Lake County, and how to protect your deposit from contract to closing. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you give when you make an offer on a home. It shows the seller you are serious and creates a financial incentive to complete the purchase. It is not extra money. If you close, it is applied to your down payment or closing costs.
If the sale does not close, the deposit is released according to the contract. The outcome depends on contingencies, deadlines, and whether each party followed the written terms.
Indiana rules in plain English
Real estate in Indiana is regulated by the Indiana Real Estate Commission. Purchase agreements and escrow instructions must be in writing to be enforceable. You should see the deposit amount, who will hold it, and the delivery deadline written into the contract.
Earnest money is usually held by a neutral escrow holder. In Indiana, that is often a title company or closing attorney, but a brokerage trust account can also be used if both sides agree. Escrow holders and brokers must safeguard client funds and keep records under state rules.
If there is a dispute over who gets the deposit, the contract controls the process. Many standard forms call for mutual written release, mediation or arbitration, or an interpleader case where a court decides.
Typical Highland practice and amounts
In Highland and across Lake County, you often see flat deposits of about $1,000 to $5,000 for modest-priced homes. For higher-priced properties, buyers commonly offer 1% to 2% of the purchase price. These are market norms, not legal rules.
Highland’s proximity to the Chicagoland area can make certain price points competitive at times. In multiple-offer situations, buyers may increase the deposit or agree to limited non-refundable terms to stand out. Balance strength with risk so you stay protected.
When you pay and who holds it
Your contract should set a clear deadline for delivering the deposit. In many Indiana deals, buyers deliver earnest money within 24 to 72 hours after both parties sign the contract. Some forms use a fixed number of business days. Follow the exact timing in your agreement.
Your deposit typically goes to the title company or closing attorney listed in the contract. A brokerage trust account is also acceptable if both sides agree and state rules are followed. Always get a receipt or written acknowledgment from the escrow holder.
Contingencies that protect your deposit
Contingencies are conditions that must be met for the sale to move forward. They protect you and shape what happens to your deposit if you cancel.
Inspection contingency
If you have an inspection contingency and you cancel within the inspection window, your earnest money is usually refunded. If you miss the deadline or waive this contingency, your ability to get the deposit back later is reduced.
Financing contingency
If your loan is denied despite good-faith efforts and you cancel within the financing period, your deposit is typically refundable. Cash and seller-financed deals change this dynamic, so read your terms closely.
Appraisal contingency
If the appraisal is low and your contract allows you to cancel, your deposit is normally refundable. Without an appraisal contingency, you may need to renegotiate price or bring extra funds.
Title contingency
If a title issue cannot be fixed within the contract timeline and you terminate under the contract’s remedies, you generally receive a refund of your deposit.
Waiving contingencies
Once you waive a contingency in writing, you accept more risk. If you back out later without a seller default, you may lose your deposit under a liquidated damages clause if the contract includes one. Weigh this carefully before waiving protections.
If the deal falls apart: who keeps it
The best outcome is a mutual written release. Buyer and seller agree to how the deposit is distributed, often after a negotiation about repairs or deadlines.
If there is no agreement, the contract’s remedy language applies. The escrow holder may hold funds until both sides sign release instructions or until a mediator, arbitrator, or court orders disbursement. Escrow holders can file an interpleader action to let a judge decide.
Litigation is time consuming and costly. Most disputes resolve through documentation and negotiation. Keep written proof of notices and deadlines to support your position.
Best practices for buyers
- Put deposit terms in writing: amount, holder, and delivery deadline.
- Get a receipt or written acknowledgment when the money is deposited.
- Use inspection, financing, appraisal, and title contingencies with clear timelines.
- Track every deadline and send notices in writing.
- Size your deposit strategically. Larger deposits can strengthen your offer but raise your risk if you default.
- In competitive situations, think through partial non-refundable terms only after you understand the tradeoffs.
Best practices for sellers
- Require the deposit to go to a neutral title company, closing attorney, or a brokerage trust account with clear escrow instructions.
- Set firm contingency periods and clear remedies for buyer default in the contract.
- If the buyer defaults, follow the notice and remedy steps in the agreement before claiming the deposit.
- Keep written records of all notices, requests, and responses.
Step-by-step: a Highland earnest money timeline
- Offer submitted. Your offer includes the deposit amount, holder, and delivery deadline.
- Offer accepted. The clock starts on your deposit deadline and contingency periods.
- Deposit delivered. You deliver funds to the escrow holder as the contract states and secure a receipt.
- Inspections begin. You schedule inspections and negotiate repairs within the inspection window.
- Appraisal and financing. Your lender orders the appraisal and finalizes loan approval within the financing timeline.
- Title review. The title commitment arrives and any issues are addressed within the title period.
- Contingencies resolved. You remove or satisfy contingencies in writing before deadlines.
- Closing. Your earnest money is applied to your funds due at closing.
If the deal terminates, the deposit is released per the contract, often by mutual written agreement.
Earnest money vs other payments
- Earnest money vs down payment. Earnest money is part of your total funds due and is applied at closing. It is not an extra cost.
- Earnest money vs option or due-diligence fees. Some states use separate non-refundable fees for an inspection period. This is not standard in Indiana, but parties can negotiate terms. Non-refundable fees should be clearly written.
- Earnest money vs repair escrow. Money held for post-closing repairs is a separate escrow and not the initial deposit.
Local tips for cross-border shoppers
Highland’s location near the Illinois state line can influence competitiveness at certain price points. Be ready to act quickly with a well-written offer, a realistic deposit, and tight but workable contingency timelines. Clear communication and documentation help you move fast without adding risk.
Work with a local team you can trust
Earnest money should be simple and predictable when your contract is clear and your deadlines are tracked. Whether you are buying your first home in Highland or moving up in Lake County, the right guidance helps you protect your deposit and keep your deal on track. If you want a step-by-step plan, talk with the local pros at Simplify Your Move Realty. We will help you structure your offer, set smart timelines, and navigate escrow with confidence.
FAQs
What is a typical earnest money amount in Highland?
- For modest-priced homes, many buyers offer about $1,000 to $5,000. For higher-priced homes, 1% to 2% of the purchase price is common, adjusted for market conditions.
Who usually holds earnest money in Lake County, Indiana?
- A title company or closing attorney typically holds the deposit. A brokerage trust account can also be used if both parties agree and state rules are followed.
How fast do I need to deposit my earnest money?
- Most Indiana contracts require delivery within 24 to 72 hours or a set number of business days after acceptance. Follow your written contract deadline.
Can I get my earnest money back after inspections?
- Yes, if you cancel within the inspection period and follow the contract’s notice rules. If you miss the deadline or waive the contingency, your refund rights are reduced.
What happens if the appraisal is low?
- If your contract has an appraisal contingency and you cancel under that clause, your deposit is typically refundable. Without that contingency, you may need to renegotiate terms or bring extra funds.
Can a seller keep my earnest money if they back out?
- If the seller breaches, the buyer may be entitled to a refund or other remedies. The contract and applicable law control the outcome.
What if the escrow holder will not release the funds?
- Escrow holders usually need mutual written instructions or a court or arbitration order. They may file an interpleader to let a judge decide who gets the deposit.
