What is an earnest money deposit?

An Earnest Money Deposit, more commonly known as an EMD, is one of the first steps in the home buying process. Today I will discuss the EMD and how quickly should one be deposited.

An EMD is essentially a good faith deposit to demonstrate to the seller that the purchaser is serious about the transaction and is willing to part with some money in advance of closing to prove his or her willingness to buy.

This is not to be confused with a down payment, which is the remaining amount that the purchaser is going to pay out of pocket to buy the house, and is paid at closing in the form of a wire or a certified or cashier’s check.

The amount of an EMD can vary, depending on the purchase price, the location of the property and the purchaser’s ability to pay in advance. Typically, a larger EMD will make the offer to purchase stronger, since a larger EMD shows to the seller a higher level of seriousness on the purchaser’s part.

Each jurisdiction has a different requirement in regards to how quickly the EMD must be deposited.

Earnest Money Deposit

  • District of Columbia: Earnest money deposit must be deposited within 7 calendar days or 5 business days.

  • Maryland: Earnest money deposit must be deposited within 7 business days.

  • Virginia: Earnest money deposit must be deposited within 5 banking business days.

Keep in mind that in all three jurisdictions, this requirement can be altered by a written agreement between the purchaser and seller.

Consequently, either the number of days can be changed or the EMD can be deposited at an agreed upon date, for example, "upon the removal of all contingencies." However, once again, keep in mind that this must be in writing and agreed upon by the parties.

Editor's note: In Maryland, if the EMD is held by a real estate broker, the Maryland Real Estate Commission requires that the broker must deposit the check within 7 business days from when the contract is ratified.  If the EMD is to be held by the title company or any other party, the number of days can be altered. (Thanks to commenter Mike for helping to clarifying this.)


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Comments (8)

  • mike


    06 May 2013 at 12:38 | #

    The number of days required for the deposit can't be changed at least in MD it is a Maryland law title 17 of the broker act. There may be some difference if the emd is given to a title company, however when a real estate broker holds emd it is 7 days.


    • webmaster


      06 May 2013 at 19:46 | #

      Hi Mike, you are correct. Thank you for helping to clarify this for our readers. Upon reading your comment, we did a little research and updated our blog entry accordingly. (GCAAR put together an article a few years ago that goes into further detail on the matter.) Thanks again!


  • Dave


    08 July 2013 at 09:52 | #

    When the contract terminates, & the buyer is entitled to a refund of the EMD, how long does the seller have to return it.


    • webmaster


      09 July 2013 at 14:39 | #

      A contract is not considered completely terminated or released until both parties have signed a release of contract which provides for how the EMD is to be returned. If the seller is refusing to return an EMD, you should consult with an attorney about the possibility of suing for the EMD.


  • john


    23 March 2015 at 19:57 | #

    Hello, it would be helpful if the article described, in DC, MD and VA, who gets the earnest money and under what conditions if the contract doesn't go through.


    • webmaster


      27 March 2015 at 16:45 | #

      Hi John, who gets the EMD depends on the facts and can vary on a case by case basis.


  • Tasha Greene

    Tasha Greene

    03 December 2015 at 11:40 | #

    Can you elaborate on this point from above? If the EMD is being held by the title company, how much leeway does a title company with regard to depositing an EMD check?

    "If the EMD is to be held by the title company or any other party, the number of days can be altered."


    • webmaster


      10 December 2015 at 11:19 | #

      Thanks for your question, Tasha. It means that the parties can negotiate or contract for the number of days before an EMD is deposited. This is not common though.


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