Earnest Money in Texas: What San Antonio Home Buyers Should Know (2026)

When a buyer I'm working with in Stone Oak, Alamo Ranch or Cibolo gets an offer accepted, the first deadline that shows up is earnest money. It's one of the most important checks you'll write during the purchase, and a lot of first-time buyers aren't sure what it is or whether they could lose it. Here's how it works on the standard Texas resale contract, in plain terms.

What earnest money is

Earnest money is a good-faith deposit that shows the seller you're serious. On the Texas Real Estate Commission's One to Four Family Residential Contract (Resale), TREC No. 20-18, the amount is left blank. It's negotiable, and you and I decide what to offer based on the home, the price and how competitive the situation is.

The money doesn't go to the seller or to me. It's made payable to the escrow agent named in the contract, which in San Antonio is usually the title company handling the closing.

When it's due

Paragraph 5A of the contract says that within 3 days after the Effective Date, the buyer must deliver the earnest money (and the Option Fee, if there is one) to the escrow agent. The two can be paid separately or combined in one payment.

If the last day falls on a Saturday, Sunday or legal holiday, the deadline moves to the end of the next day that isn't a Saturday, Sunday or legal holiday.

The contract also has a spot for additional earnest money, due a set number of days after the Effective Date, if the parties agree to it. Money the escrow agent receives is applied first to the Option Fee, then to the earnest money, then to any additional earnest money.

What happens if it's late

Under Paragraph 5C, if the buyer doesn't deliver the earnest money on time, the seller may terminate the contract, use the seller's remedies under Paragraph 15, or both, by giving notice before the buyer delivers it. That's why I help my buyers line up the funds and the delivery method before we even submit an offer.

What happens at closing

If the sale closes, Paragraph 18B says the earnest money is applied first to your cash down payment, then to your expenses, and any excess is refunded to you. In other words, it isn't an extra cost. It's part of the money you were already going to bring to closing.

When you can get it back

Several parts of the contract let a buyer terminate and receive the earnest money back. A few common ones:

• Terminating within the Option Period (if you paid an Option Fee). The Option Fee goes to the seller, but the earnest money is refunded.
• The title commitment and exception documents aren't delivered within the time the contract requires.
• Financing contingencies in the Third Party Financing Addendum, if one is attached and its terms are met.
• The seller defaults. Under Paragraph 15, the buyer may enforce specific performance or terminate and receive the earnest money.

The reverse is also true. If the buyer defaults without a contractual right to terminate, Paragraph 15 lets the seller terminate and keep the earnest money as liquidated damages. Deadlines matter.

How the money is released

If a contract ends without closing, Paragraph 18C says either party or the escrow agent can send a release of earnest money for both parties to sign. If one party won't sign, the other can make a written demand to the escrow agent. If the other party doesn't object in writing within 15 days, the escrow agent may release the money to the party who made the demand, less unpaid expenses. Under Paragraph 18D, a party who wrongfully refuses to sign an acceptable release within 7 days of receiving the request can be liable for damages, the earnest money, attorney's fees and costs.

My tips for protecting your earnest money

• Know your Effective Date and count the days on a calendar right away.
• Confirm wiring instructions by calling the title company at a number you already know. Never trust instructions that arrive only by email.
• Calendar your Option Period, financing and title deadlines.
• Ask questions before you sign. A short conversation up front saves a lot of stress later.

This article is general information about the TREC resale contract form, not legal advice. Your contract and addenda control, so read them carefully and talk with a Texas real estate attorney about legal questions.

Source: TREC One to Four Family Residential Contract (Resale), Form 20-18: https://www.trec.texas.gov/sites/default/files/pdf-forms/20-18.pdf

Buying a home in San Antonio?

I'm Chris Dudley, a San Antonio REALTOR® (TREC #731381) and founder of Legacy Realty Group, brokered by Real Broker, LLC. I help first-time buyers, relocating military families and move-up buyers across San Antonio, Stone Oak, Alamo Ranch, Cibolo, Schertz and Boerne. Reach me at (210) 838-6099 or chrisdudleyrealty@gmail.com.