When is a buyer's earnest money typically returned?

The situation in which a buyer's earnest money is typically returned is when a financed transaction falls through due to loan denial. This reflects the principle that earnest money is meant to show good faith on the part of the buyer, and if the buyer loses the ability to secure financing through no fault of their own, such as a loan denial, they are generally entitled to the return of their earnest money.

In many real estate contracts, contingencies are built in to protect the buyer. One such contingency would be for financing. If the buyer applies for a loan and does not qualify, they can present this as a reason for the return of the earnest money deposit. Notably, the specific contract terms would govern these conditions, but most agreements include provisions for such scenarios to safeguard buyer interests.

This contrasted with situations related to seller or buyer acceptance or events like appraisal completion, which do not typically trigger the return of earnest money unless stipulated in the terms of the contract outlining specific conditions for the refund.