Earnest Money in Minnesota: A Simple Guide

Buying a home in Saint Paul and hearing “earnest money” for the first time? You are not alone. This small deposit plays a big role in getting your offer accepted and keeping your deal on track. In this guide, you’ll learn what earnest money is, how much to offer in our local market, when it is due, and how to protect it with the right contingencies and timelines. Let’s dive in.

What earnest money means in Minnesota

Earnest money is your good‑faith deposit that goes with an accepted offer. It signals to the seller that you intend to complete the purchase while both sides work through inspections, financing, title, and closing.

If you close, your earnest money is applied to your down payment or closing costs. If you do not close, the deposit may be refunded or forfeited based on the contract and whether you followed the contingency rules.

Who holds your deposit

In Minnesota, earnest money is typically held by a neutral third party. Common holders include a title or escrow company, an attorney trust account, or a real estate broker’s trust account.

Your purchase agreement will name the holder. Many Saint Paul offers direct funds to a title company or the listing broker’s trust account, depending on what the parties agree to in writing.

How much to offer in Saint Paul

Typical earnest money ranges include a flat amount such as $1,000 to $5,000 for modest transactions, or a percentage of about 1% to 3% of the purchase price. For higher‑priced homes, 1% to 2% is a common starting point.

The local market matters. In competitive East Metro conditions, sellers may expect larger deposits or faster delivery. In slower periods, smaller amounts are often accepted. Ask your agent to share recent Saint Paul offer patterns so you can set a confident number.

When and how to deliver

Your purchase agreement sets the deposit deadline. Many Minnesota contracts require delivery within 1 to 5 business days after mutual acceptance. If you cannot meet the deadline, request a written extension before the due date to avoid default.

Common delivery methods include wire transfer to the title company, cashier’s check or certified check, or an approved electronic escrow platform. Always get a written receipt and keep copies for your records.

Be alert to wire‑fraud risk. Verify wiring instructions by phone using a trusted number, not just an email. Confirm the recipient and account name, and ask for written confirmation when funds are received.

Contingencies that protect you

Contingencies protect your deposit by giving you a clear path to cancel within specific timelines.

• Inspection contingency: You can inspect and, if needed, terminate within the inspection period as the contract allows.
• Financing or mortgage commitment: If you cannot obtain the loan described in your contract and you terminate within the contingency timeline, your deposit is generally refundable.
• Appraisal contingency: If the appraisal comes in below the price and your contract provides an appraisal out, you may cancel and keep your deposit if you follow the notice rules.
• Title and sale‑of‑home: Other conditions, such as title clearance or the sale of your current home, can preserve your refund rights if you act on time.

The key is to follow the exact notice method and deadline in your contract. Missing a step can put your deposit at risk.

When deposits are refunded or forfeited

Your earnest money is typically refundable if you cancel within a covered contingency period and follow the contract’s notice rules. Your deposit may be forfeited if you fail to perform after removing or satisfying contingencies, for example if you cannot close without a contractual right to terminate.

Contract language matters. Minnesota purchase agreements outline remedies, the release process, and sometimes mediation or arbitration options. The escrow holder will not release funds without joint written instructions or a court order if there is a dispute.

Real Saint Paul scenarios

• Scenario A, inspection termination: Your offer is accepted June 1 and your deposit is due June 3 to a title company. You complete inspection by June 10, discover a major structural issue, and send a proper termination before the inspection deadline. Result: your earnest money is refunded, subject to any holdback terms in your contract.
• Scenario B, financing failure after removing contingency: You remove financing after receiving a commitment, then your loan falls through. Result: you have likely forfeited the deposit, unless the seller breached or another contract clause applies.
• Scenario C, multiple offers and seller breach: The seller accepts your offer, then tries to accept another offer without ending your contract. Result: you can seek return of your earnest money and may have other remedies depending on your agreement.

Step‑by‑step checklist

Before you write the offer

• Review recent Saint Paul accepted‑offer behavior with your agent to size your deposit.
• Decide who will hold funds, title company or broker trust account, and plan funding method.
• Confirm contingency deadlines you need and make sure they are in the offer.

Protecting your earnest money

• Use clear contingencies with realistic timelines and do not remove them too early.
• Deliver the deposit on time and secure a written receipt.
• Prefer a neutral title company when possible and confirm the escrow account details in writing.
• For wires, verify instructions by phone using a known number and watch for last‑minute email changes.

If a dispute arises

• Save all communications and confirmations.
• Ask for a mutual written release if both parties agree on the outcome.
• If the seller claims the deposit and you disagree, talk to your agent and consider mediation, arbitration, or legal counsel. Escrow will usually need joint instructions or a court order to release disputed funds.

Local insights for Ramsey County buyers

In Saint Paul, your deposit strategy should match neighborhood activity and seller expectations. What wins in a highly competitive listing may be different from a quieter segment of the market.

Most buyers deliver funds within a few business days after acceptance. Title and escrow companies, attorneys, and brokers follow Minnesota rules for handling client funds. Keep your receipt, track your deadlines, and use written notices.

Remember that earnest money is not recorded with Ramsey County, only deeds and mortgage documents are recorded at the county level. Your escrow holder will keep your deposit secure until closing or until both parties sign a release.

Work with a team that protects you

A smart earnest money plan makes your offer stronger and keeps your investment safe. From setting the right deposit to managing deadlines and notices, our team guides you through each step so you can focus on the home.

If you are getting ready to buy in Saint Paul or anywhere in the East Metro, reach out to the Cooking Real Estate Team. We will help you craft a competitive offer and protect your interests from acceptance to closing.

FAQs

What is earnest money in Minnesota?

• It is a good‑faith deposit that accompanies an accepted offer and is credited to your costs at closing or returned or forfeited based on your contract performance.

How much earnest money is typical in Saint Paul?

• Many buyers offer $1,000 to $5,000 or about 1% to 3% of the price, adjusted for property price and current East Metro competitiveness.

When is earnest money due after offer acceptance?

• Many Minnesota contracts require delivery within 1 to 5 business days after acceptance, but follow the exact deadline written in your agreement.

Who usually holds earnest money in Minnesota deals?

• A title or escrow company, an attorney trust account, or a real estate broker’s trust account, as specified in the purchase agreement.

When can a seller keep the earnest money?

• If you fail to perform after contingencies are satisfied or removed, the seller may claim the deposit as liquidated damages based on the contract terms.