If I back out of a California home purchase, what happens to my earnest money deposit?
Earnest money in a typical Southern California transaction runs 1 to 3 percent of the purchase price, deposited within about three business days of acceptance and held in escrow by a neutral third party, never by the seller or the listing office.
If you cancel during a live contingency period, the deposit is returned. The standard California Residential Purchase Agreement (RPA-CA) gives you a property investigation and appraisal contingency (17 days by default) and a loan contingency (21 days by default). Contingencies do not expire on their own: you must remove them in writing, which is exactly why tracking the calendar is a protection rather than a formality.
If you default with no valid cancellation right, the seller may keep the deposit as liquidated damages. Under the RPA-CA and California Civil Code Section 1675, the amount a seller can retain is capped at 3 percent of the purchase price, and the liquidated damages clause applies only if both the buyers and the sellers initialed it. Deposits are never released without written escrow instructions, and disputes typically go to mediation or arbitration before any court.
Doug has spent 29 years managing these exact deadlines, counters, and deposit disputes across Ventura County and Los Angeles County escrows. Knowing which signature matters and when is the difference between a returned deposit and a fight. He will walk you through the calendar before you sign, not after.