The escrow deposit in a real estate transaction is an amount placed in escrow by the buyer as a good faith gesture of the buyer’s desire to purchase a property. It often also serves as the damages to a seller if the buyer breaches the contract. The escrow deposit will sit with the escrow agent until the transaction closes or cancels.
If a transaction cancels, be advised that the escrow deposit cannot be returned by the closing agent to the buyer until buyer and seller both agree in writing to the cancellation of the contract and the release of the deposit. Typically, if both buyer and seller agree to cancel, they will need to sign a Release and Cancellation of Contract that specifies where the escrow deposit will be sent.
If the parties cannot agree on what happens to the escrow deposit and there is a dispute over the escrow deposit, then the money will sit in the escrow account of the escrow agent or a court registry until the dispute is resolved.