What Is Earnest Money In Vermont?

Have you heard the term earnest money and wondered how it actually works in Vermont? You are not alone. This small but important deposit can strengthen your offer or protect you if a deal falls through. In this guide, you will learn what earnest money is, typical amounts in Woodstock, Norwich, and the Upper Valley, when it is refundable, and how to safeguard it from contract to closing. Let’s dive in.

Earnest money basics in Vermont

Earnest money is a good‑faith deposit you make when you sign a purchase and sale agreement. It shows commitment and is credited toward your purchase price or closing costs at closing. It is contract money, not a fee, so the purchase agreement controls how it is handled.

In Vermont, the deposit is typically held in escrow by a neutral party. This could be a title or settlement agent, a real estate brokerage trust account, or an attorney’s trust account. Vermont closings often involve attorneys, and many buyers and sellers choose to have an attorney hold the funds in trust. If you need help locating counsel, the Vermont Bar Association’s resources are a helpful starting point.

Your contract should clearly name the escrow holder, the deposit amount, when it is due, and how and when it can be released. Clear terms help both sides avoid confusion later.

Typical amounts in the Upper Valley

Earnest money amounts in Vermont are set by agreement between buyer and seller. Two common approaches are a percentage of the purchase price or a flat dollar amount. Market conditions in Woodstock, Norwich, and nearby towns influence what is considered competitive.

Typical local patterns include:

• Lower‑priced homes or condos: about $500 to $2,000.
• Many single‑family homes: about $2,000 to $10,000, or around 1% of the price as a reference point.
• Higher‑priced properties: a larger flat amount or 1% to 3% of the price.

A few quick examples:

• On a $300,000 home, 1% is $3,000. Flat deposits often range from $2,000 to $5,000.
• On a $600,000 home, 1% is $6,000. In competitive scenarios, sellers may see $10,000 or more.

These are common patterns in the Upper Valley, not hard rules. Your agent can help you confirm current norms for your price point and neighborhood.

Refund rules and contingencies

Whether you can get your earnest money back depends on your contract and how you meet the deadlines. Contingencies are the main protections that allow a refund when used correctly.

• Inspection contingency. If you cancel within the inspection period and follow the contract’s notice steps, you are usually entitled to a full refund. If you miss the deadline or waived this contingency, your deposit is more at risk.
• Financing contingency. If you cannot secure your loan despite good‑faith efforts and notify the seller within the stated time (often with a lender denial letter), your deposit is typically refundable.
• Appraisal contingency. If the appraisal comes in low and you cannot reach a new agreement on price or terms, this contingency can allow you to cancel and recover your deposit.
• Title contingency. If title issues make the property unmarketable and the contract provides for a title contingency, you can often cancel and receive a refund.
• Sale of buyer’s property. If your purchase depends on selling your current home and it does not sell within the agreed time, your contract may allow you to cancel for a refund, as long as you follow the procedure.

Strict deadlines matter. Provide written notice exactly the way your contract requires. If you are unsure how to document a notice, your attorney can guide you. The Consumer Financial Protection Bureau’s homebuying guides also offer practical tips on closing and escrow steps.

When a seller may keep it

A seller may be entitled to keep the earnest money if a buyer breaches the contract. Common examples include failing to close without a valid contingency, missing contingency deadlines, or waiving protections and then backing out.

Some Vermont purchase agreements include a liquidated damages clause. This clause states that the seller may keep the deposit as the agreed remedy if the buyer defaults. These clauses must be reasonable to be enforceable, so make sure you understand any such language before signing.

Escrow, timelines, and releases

Escrow agents follow the written contract. They will hold the funds until they receive joint written instructions from both parties or an order from a court or arbitrator. If there is a dispute, the funds may remain in escrow until it is resolved.

Your contract should spell out when the deposit is due after signing, often within 48 to 72 hours, and how it must be delivered, such as a certified check or wire. Vermont regulates aspects of trust accounts and licensing. For oversight context, see the Vermont Department of Financial Regulation. If you want to review laws or look up terms, you can search the Vermont Legislature’s statutes.

Buyer checklist: protect your deposit

• Confirm the deposit amount, due date, and the escrow holder in your signed contract.
• Include clear contingencies for inspection, financing, appraisal, title, and sale of your property, with firm dates.
• Get a written receipt when your funds are deposited. Keep copies of notices and emails.
• Calendar your deadlines, and submit any cancellation or extension notices in writing before the cutoff.
• Be cautious about waiving contingencies unless you fully accept the risk to your deposit.
• If you prefer attorney oversight, ask to have funds held in an attorney trust account.

Seller checklist: reduce risk and disputes

• Require the contract to name the escrow holder, deposit timing, and release procedures.
• Consider whether a reasonable liquidated damages clause fits your goals. Ask an attorney to review.
• Confirm the deposit is delivered on time and request a receipt to share with the buyer.
• If a buyer misses a contingency deadline, follow the notice steps in your contract to preserve your rights.

Shared logistics for smooth closings

• Identify the escrow agent in the contract and list contact details.
• Specify deposit timing and payment method.
• Require mutual written instructions or a court order for any release of funds.
• Keep all agreements and changes in writing. Verbal promises are harder to enforce.

Sample timeline you can expect

• Contract signed: buyer deposits earnest money within the agreed window, often 48 to 72 hours.
• Inspection period: commonly 7 to 14 days to complete inspections and send any notices or requests in writing.
• Financing period: often 21 to 30 days to secure a loan commitment and provide updates.
• Closing: the deposit is credited to the buyer at settlement.

Upper Valley context to know

• Attorney involvement is common in Vermont, and many attorneys hold escrow funds in trust. The Vermont Bar Association can help you find local real estate counsel.
• Local practice can differ from town to town. Your agent can help you tailor deposit size and timing to Woodstock, Norwich, or another Upper Valley micro‑market.
• Backup offers are not unusual. Your contract should state what happens to the deposit if a backup contract becomes active or if timelines shift.

Trusted resources

• For a clear overview of earnest money in real estate, review the National Association of REALTORS resources.
• For step‑by‑step homebuying guidance and closing tips, see the CFPB’s homebuying resources.
• To understand oversight of trust accounts and licensing, check the Vermont Department of Financial Regulation.
• To search state laws and contract terms, use the Vermont Legislature’s statutes.
• For statewide market context and forms information, visit Vermont REALTORS.

Ready for next steps?

When you understand earnest money, you can write stronger offers and avoid costly missteps. If you are planning a move in Woodstock, Norwich, or anywhere in the Upper Valley, let a local specialist guide you through timelines, contingencies, and escrow details. Reach out to Jaime Durell to talk strategy or Request a Free Home Valuation.

FAQs

In Vermont home purchases, what is earnest money?

• It is a good‑faith deposit made when you sign a purchase agreement, held in escrow and credited to you at closing according to the contract.

In Woodstock or Norwich, how much earnest money is typical?

• Many local deals use $2,000 to $10,000 for single‑family homes or about 1 percent of the price, with lower amounts for entry‑level homes and higher for premium properties.

When is earnest money refundable in Vermont?

• It is usually refundable if you validly cancel under a contingency, such as inspection, financing, appraisal, or title, and you meet all deadlines and notice requirements.

Can a seller keep my deposit if I back out?

• If you breach the contract or miss contingency deadlines without a valid reason, the seller may claim the deposit, especially if a liquidated damages clause applies.

Who holds the deposit and how is it released?

• A title company, brokerage, or attorney typically holds it in escrow and releases it only with mutual written instructions or a court or arbitration order.