Earnest Money In North Dakota: What Buyers Should Know

Worried about losing your deposit when you make an offer on a home in Bismarck? You are not alone. Earnest money is a normal part of buying a home, but the rules live inside your contract and the local process. In this guide, you will learn what earnest money is, how it works in North Dakota, the clauses that protect you, and local tips for Bismarck and Burleigh County. Let’s dive in.

Earnest money basics in North Dakota

Earnest money is a good‑faith deposit you pay after your offer is accepted to show the seller you plan to close. If you complete the purchase, it is credited toward your costs at closing.

The purpose is simple: it signals you are serious, it provides the seller some security if you breach the contract, and it becomes part of your funds at closing.

Do not confuse earnest money with your down payment. Your down payment is separate and paid at closing. Some markets also use an option or due‑diligence fee, which is a separate nonrefundable payment. If your contract mentions different fees, make sure you know which is which.

How it works in Bismarck

Earnest money amounts vary with local supply and demand. Nationally, buyers often offer a small fixed amount up to roughly 1–3% of the price, but that is only a general guideline. In Bismarck, the right amount depends on price point, the property’s appeal, and current market conditions. Ask your agent for recent local comps before you choose a figure.

The timing to deposit is set by your purchase agreement. Many contracts require delivery within 24 to 72 hours of acceptance. Read your timelines carefully and plan your funds transfer early.

Your purchase agreement will name the escrow holder. In North Dakota that is often a title or closing company, sometimes a real estate broker, or an attorney. These parties must keep client funds in trust accounts and follow state rules. You can review licensing and trust‑account oversight on the North Dakota Real Estate Commission site.

If you close, your earnest money is credited to your closing costs or down payment. If you cancel under a valid contingency and follow the contract’s steps, you typically get a refund. If you default outside the contract’s protections, the seller may claim the deposit.

Contract protections that safeguard your deposit

Your rights come from the purchase agreement. Focus on these clauses and deadlines.

Inspection contingency

This gives you time to inspect the property and negotiate repairs. If the contract allows and you act within the inspection period, you can cancel and recover your deposit if the results are not acceptable.

Financing contingency

If your loan is denied and you follow the notice and deadline requirements, this clause typically allows you to cancel and get your earnest money back.

Appraisal contingency

If the appraisal comes in low and you cannot resolve the gap, this clause can let you exit without forfeiting your deposit. Watch the timelines.

Title contingency

If the seller cannot deliver clear, marketable title and it cannot be cured, you can usually cancel and receive a refund.

Deadlines and “time is of the essence”

Many contracts make deadlines strict. Missing a date can put your deposit at risk. Put every key date on your calendar and set reminders.

Liquidated damages and disbursement

Some contracts state that the seller’s remedy for a buyer default is to keep the earnest money. Many also require written agreement, arbitration, mediation, or a court order before the escrow holder releases funds. Read the disbursement instructions so you know how refunds are decided.

Local factors to plan for in Bismarck

Radon testing

Much of North Dakota has elevated radon potential. Plan for a radon test and make sure your inspection or radon contingency allows time for results. For background, see the EPA guidance on radon.

Well and septic

Rural or older properties around Burleigh County may have private wells and septic systems. Build in time for water quality testing, septic inspections, and any needed permits.

Floodplain, utilities, and mineral rights

Confirm whether the property sits in a flood zone, what utilities are installed, and whether there are any mineral or oil and gas rights that affect title or use. Your title company can help you review recorded documents.

Title, recording, and taxes

Deeds and mortgages are recorded with the Burleigh County Recorder. Title insurance is commonly used. Property taxes and special assessments are prorated at closing and are separate from earnest money.

Market competitiveness

In a multiple‑offer situation, sellers may expect stronger deposits or tighter timelines. In a slower market, you may keep a smaller deposit and stronger contingencies. Ask your agent for the latest Bismarck‑Mandan market trends before you write the offer.

How disputes are handled in North Dakota

If there is a disagreement over earnest money, start by reviewing your contract. Look at the contingencies, deadlines, and any liquidated damages or dispute procedures.

Next, contact the escrow holder and both brokers in writing. Follow any required notice steps in the purchase agreement. Some contracts call for broker mediation or arbitration before a release.

If the contract’s process does not resolve it, the parties may go to court to decide who is entitled to the funds. Keep all evidence, including inspection reports, lender communications, appraisal results, amendments, and written notices.

If you think a trust account was mishandled, you can review consumer resources and the complaint process with the North Dakota Real Estate Commission.

Prevent wire fraud when sending earnest money

Wire fraud is a major risk in real estate. Criminals spoof email or phone messages to send fake wiring instructions. Protect yourself with a few simple steps.

• Do not rely only on email for wiring instructions. Call the title or escrow company at a verified phone number to confirm account details.
• Verify contact information from the company’s official website or prior documents, not from a new email.
• Consider using a cashier’s check if your title company allows it.
• After you send funds, ask for a written receipt and confirmation.
• If you suspect fraud, contact your bank immediately and report it to the FBI’s Internet Crime Complaint Center.

Quick checklist for Bismarck buyers

• Confirm who will hold your earnest money and how to deliver it.
• Calendar every contingency deadline and reminder dates.
• Order inspections early, including radon, and plan for well/septic if needed.
• Stay in close contact with your lender about financing and appraisal timelines.
• Keep all notices and reports in writing.
• Verify any wiring instructions by phone using known contact details.
• Ask your agent: Which contingencies protect me? What are the exact steps to cancel and keep my deposit if needed?

Buying in Bismarck should feel empowering, not stressful. With the right contract protections, clear timelines, and local diligence, you can make a strong offer and protect your deposit from start to finish. If you want a local guide who watches the details and keeps you on track, let’s talk.

Ready to get started? Schedule your buyer consult with Travis Huber Realty today. Schedule a Free Consultation.

FAQs

How much earnest money should I offer in Bismarck?

• There is no set rule. Nationally, buyers often offer a small fixed amount up to roughly 1–3% of the price, but local conditions drive the norm. Ask your agent for current Bismarck market guidance before you decide.

Where will my earnest money be held in North Dakota?

• Your purchase agreement names the escrow holder, often a title or closing company, sometimes a broker or attorney. Funds must be placed in a trust or escrow account, and you should receive a receipt.

When do I pay the earnest money after an offer is accepted?

• Most contracts require deposit within a short window, often 24 to 72 hours, but your agreement controls the exact timing. Plan your delivery method before you sign.

Can a seller keep my earnest money if I back out of the sale?

• Only if the contract allows it, such as a buyer default after contingencies expire or under a liquidated damages clause. If you cancel under a valid contingency and follow the notice steps, you should be entitled to a refund.

What happens to my earnest money if my loan is denied?

• If your contract includes a financing contingency and you meet the notice and deadline requirements, you would typically receive your deposit back.

How can I prevent wire fraud when paying earnest money in Bismarck?

• Confirm wiring instructions by phone using a known number for the title company, do not rely on emailed details alone, and request a receipt after sending funds. Report suspected fraud to the FBI’s IC3.