Purchase and Sale Disputes · Las Vegas, Nevada

    Who Gets the Earnest Money When a Nevada Home Sale Falls Through?

    By , Nevada attorney and real estate broker · · 6 min read

    The short answer

    In a failed Nevada home sale, the earnest money goes to whichever party the purchase agreement entitles to it. If the buyer cancels within a valid contingency period, such as the due-diligence, financing, or appraisal contingency, and gives timely written notice, the buyer usually gets the deposit back. If the buyer defaults without a contractual right to cancel, the seller typically keeps the deposit, often as liquidated damages under the contract. Escrow companies will not release disputed funds on one side's demand; they need both parties' signed instructions or a court order. When the parties disagree, the money stays in escrow until they settle, mediate, or the escrow company files an interpleader action asking a court to decide.

    The contract controls

    The standard Nevada residential purchase agreement sets deadlines for due diligence, loan approval, appraisal, and the seller's disclosures. Each contingency gives the buyer a defined window to cancel and recover the deposit. Missing a deadline, or cancelling for a reason the contract does not allow, usually shifts the deposit toward the seller.

    When the buyer usually gets the deposit back

    Common situations favoring the buyer:

    • Cancellation within the due-diligence period with written notice
    • Loan denial within the financing contingency, properly documented
    • Appraisal below price when an appraisal contingency applies
    • Seller fails to deliver required disclosures under NRS 113.130
    • Seller cannot deliver clear title or otherwise defaults

    When the seller usually keeps it

    The seller generally keeps the deposit if the buyer simply changes their mind after contingencies expire, misses the closing date without excuse, or fails to bring funds to close. Many contracts treat the deposit as liquidated damages, the seller's agreed remedy, which can limit the seller's other claims.

    How escrow handles a dispute

    Escrow is a neutral stakeholder. When the buyer and seller send conflicting instructions, escrow holds the money. Under Nevada practice, escrow may file an interpleader, depositing the funds with the court and stepping out of the fight. Escrow fees and interpleader costs often come out of the deposit, which shrinks the pot for both sides.

    How to resolve an earnest money dispute

    Practical steps:

    • Pull the contract, addenda, and every dated notice exchanged
    • Build a timeline of deadlines versus the actual dates notices were sent
    • Send a written demand to the other side and escrow
    • Use the mediation clause most Nevada purchase agreements contain
    • Consider a split if the deposit is small relative to legal costs
    • If unresolved, file suit or respond to escrow's interpleader

    When to call an attorney

    If the deposit is significant, or if the dispute is part of a larger fight over whether the other side breached, get advice before signing any release. Signing a cancellation and release can waive claims for specific performance or damages beyond the deposit.

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    This article is general information about Nevada law, not legal advice for your situation, and reading it does not create an attorney-client relationship. For advice about your matter, call (702) 471-0112.

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