Quick Answer
Most deals close without any issue, but if a contract falls apart and both sides believe they're owed the earnest money, that's a dispute. In Indiana, whoever is holding the deposit, often a title company, generally can't release the funds until both parties agree in writing or a court resolves it.
- Who holds funds during a dispute
- The title company or brokerage, neutrally
- How it's resolved
- Written mutual release, or a court decision
- What it depends on
- Whether a contingency justified canceling the contract
- Best prevention
- Clear contract terms and documented deadlines
Why Disputes Happen
Most disputes come down to disagreement over whether a buyer had a valid contingency to cancel the contract, or whether they simply changed their mind after a deadline had passed. The holder of the funds isn't in a position to judge who's right; they just wait for both sides to agree.
Clear documentation matters here, which is one reason your earnest money receipt and any written contingency notices are worth keeping.
How These Get Resolved
The most common path is a mutual release, where both parties sign an agreement dividing or assigning the funds, often after some negotiation. If that fails, either side can pursue mediation or small claims court, though this is a last resort most buyers and sellers prefer to avoid.
Working with an experienced agent and title company from the start helps prevent disputes, since deadlines and contingency language are tracked carefully and communicated as issues arise, not after the fact.
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Frequently Asked Questions — Earnest money dispute
Can I get my earnest money back automatically if a deal falls through?
Only if you canceled properly under a valid contingency and within its deadline; otherwise release usually requires mutual agreement.
Who decides an earnest money dispute?
Neither party alone; the funds stay with the neutral holder until both sides sign a release or a court orders otherwise.
How long can a dispute take to resolve?
It varies widely, from a quick mutual agreement to a longer process if the parties end up in mediation or court.
Does the title company keep the money if there's a dispute?
No, the title company simply holds it neutrally; they don't have authority to award it to either side on their own.