Earnest Money Deposit (EMD): what Canadian buyers need to know

60-second summary

In Florida, the EMD is the buyer's signal that an offer is serious. The amount is set in the contract, not by statute, and typically falls between 1% and 3% of the purchase price for resale residential, with 5% to 10% common in luxury or competitive submarkets. Under the FAR/BAR contract used in the vast majority of Florida residential transactions, the deposit is due within three days of the effective date and held by a third-party escrow agent (title company, real estate attorney, or licensed broker), not by the seller. If the deal closes, the EMD is credited toward the purchase price and closing costs. If the deal collapses inside a contractual contingency (typically the 15-day inspection window in the AS-IS contract), the deposit is refunded. If the buyer walks outside a contingency, or misses a deadline, the seller is generally entitled to keep it. For a Canadian buyer, the highest-stakes risk is not the deposit amount itself but the wire-transfer mechanics: business email compromise scams target real estate closings specifically, and a misrouted wire is rarely recovered.

Glossary of acronyms

Why this topic matters for a Canadian buyer

Canadians buying in Florida often experience the EMD as a culture shock. In Quebec, under the OACIQ standard promesse d'achat, depositing an acompte is entirely optional, and many buyers sign a binding offer without putting any money down. In Florida, the practical reality is the opposite. Sellers and listing brokers expect a meaningful EMD, and an offer presented without one is unlikely to be taken seriously, regardless of the price.

The deposit is also where Canadian buyers first encounter the Florida statutory framework that governs the rest of the transaction. The EMD touches Florida real estate brokerage law (Chapter 475, F.S.), Florida Administrative Code rules (Chapter 61J2), and, for new construction or pre-construction condos, Florida consumer protection statutes (Chapters 501 and 718). This page covers the resale residential case in detail, with brief sections on new construction and pre-construction condos because their statutory regimes are different.

The Canadian banking dimension also matters. EMD funds must reach the Florida escrow agent in US dollars, typically by wire from a Canadian institution. The wire path, the FX conversion, and the verification protocol are the practical bottlenecks. The legal mechanics of escrow are well-defined; the operational risk is on the buyer's side.

Canada and Florida: how the deposit mechanics differ

The deposit serves the same economic function in both jurisdictions (signal commitment, give the seller skin in the game), but the legal and practical defaults are very different.

The single biggest cultural gap to internalize: in Quebec, the deposit is a courtesy. In Florida, it is the entry ticket.

How much you should expect to deposit

For context, on a USD 600,000 resale condo in Boca Raton, a 1% EMD is USD 6,000, a 3% EMD is USD 18,000, and a 10% EMD is USD 60,000. Florida sellers reading offers will often weigh the deposit amount alongside price, financing, and contingencies.

Who holds the deposit

In Florida, the EMD is never paid directly to the seller. It is delivered to a neutral third party who holds it in escrow until disbursement is properly authorized. The contract specifies who that escrow agent is, and Florida law restricts who is eligible.

Under Florida Statutes § 475.25(1)(k), a real estate broker who receives EMD funds must immediately place them in a trust or escrow account at a Florida bank, credit union, savings and loan, or title company, and the funds must remain there until disbursement is properly authorized. Rule 61J2-14.008(3) of the Florida Administrative Code defines "immediately" as no later than the end of the third business day following receipt, with Saturdays, Sundays, and legal holidays excluded.

In practice, three escrow holder profiles dominate. The title company is the most common in standard residential resales: it doubles as the closing agent and absorbs the EMD into the closing process seamlessly. A Florida-licensed real estate attorney may serve as escrow agent, particularly on commercial transactions, complex residential, or when one party prefers attorney closings. The listing broker's escrow account is also legally permissible but increasingly less common, because brokers prefer to delegate the audit risk and FREC compliance burden to title companies.

For a Canadian buyer, the practical takeaway: confirm the escrow agent's identity, license status, and wire instructions in writing, and verify them by phone using a number you obtained independently of any email. The escrow agent's name and address must appear in the FAR/BAR contract (specifically in Paragraph 2(a) of the AS-IS contract), and any change to those wiring details after the contract is signed is a red flag.

The timeline: when the EMD is due and what triggers each clock

The FAR/BAR contract is built on two anchors: the effective date (the date the last party signed and delivered the executed contract or final counter-offer) and the closing date. Most deadlines, including the EMD deadline, run from the effective date.

The default delivery window for the EMD under the FAR/BAR contract is three days after the effective date, calculated in calendar days under Standard F of the contract. (If the third day falls on a Saturday, Sunday, or US national legal holiday, the deadline extends to the next business day.) "Delivery" means the funds reach the escrow agent's account, not that the buyer initiated the wire. A wire initiated on day three that arrives on day four is technically late.

The inspection period in the AS-IS contract is 15 days after the effective date by default, and this is the most important window to understand. During this period, the buyer can terminate the contract for any reason in their sole discretion and recover the EMD in full. After the inspection period closes, the deposit is essentially locked in: cancelling outside another active contingency (financing, appraisal, title, casualty loss) generally results in forfeiture.

If the contract includes a financing contingency, the loan approval period is typically 30 days under the FAR/BAR Standard contract. If the buyer cannot secure loan approval by the deadline and properly notifies the seller in writing, the EMD is refunded. If the buyer fails to act within the loan approval period, the contingency is deemed waived and the deposit becomes at risk if financing later falls through.

Closing dates are typically set 30 to 60 days from the effective date for resale transactions, with longer periods (60 to 90 days) common for foreign-national mortgages because of the additional underwriting time.

New construction and pre-construction condos: a different statutory regime

Two Florida statutes change the rules when the buyer is purchasing from a builder or developer rather than from an existing owner.

Pre-construction or under-construction condos (residential). Florida Statutes § 718.202 requires the developer to place all buyer payments up to 10% of the purchase price into an escrow account held by an independent escrow agent. Funds beyond 10% may, in certain circumstances, be released to the developer for actual construction and development costs, but the initial 10% must remain in escrow until closing or contract termination. If the developer fails to comply with the escrow requirements, the contract is voidable by the buyer. The Florida courts have applied this rule strictly: in Double AA International Investment Group v. Swire Pacific Holdings (S.D. Fla. 2010), a developer's commingling of initial and excess deposits in a single account was held to entitle buyers to rescission. The 2010 amendment now allows a single escrow account if separate accounting records are maintained.

New one-family or two-family homes (non-condo). Florida Statutes § 501.1375 requires the builder or developer to notify the buyer of the right to have all deposits up to 10% of the purchase price held in escrow with a bank, attorney, broker, or title insurance company. The buyer can waive that right in writing, but the waiver must be informed and contractual. If the buyer does not waive, withdrawals from the escrow generally require both the buyer's and the developer's signatures, with limited statutory exceptions.

For a Canadian buyer interested in a pre-construction Miami or Fort Lauderdale condo, this means a much larger deposit, often 10% on signing followed by additional 10% to 20% milestone deposits during construction. These contracts are not FAR/BAR contracts; they are developer-drafted purchase agreements that vary materially from project to project. Read them with a Florida real estate attorney before signing, because the standard FAR/BAR protections do not apply.

What gets your deposit refunded

Under the FAR/BAR AS-IS contract, the buyer's principal protection is the inspection period. Paragraph 12 of the AS-IS form gives the buyer the right to terminate the contract during the inspection period (15 days by default) "in Buyer's sole discretion" with a refund of the EMD. The buyer does not need to identify a defect or justify the cancellation; written notice within the window is sufficient.

Beyond the inspection contingency, the FAR/BAR contract typically preserves the buyer's right to a refund in the following circumstances:

The financing contingency, when included, allows refund if the buyer cannot obtain loan approval by the loan approval deadline (typically 30 days). The appraisal contingency, when added, allows the buyer to terminate if the property does not appraise for at least the contract price. The title contingency permits termination if the seller cannot deliver marketable title within the cure period. The casualty loss clause (Paragraph 10) allows termination if the property suffers significant damage between contract and closing.

Outside these contingencies, refund requires the seller's agreement, an Escrow Disbursement Order from FREC, arbitration, interpleader, or mediation. The default position once a contingency expires is that the EMD is forfeited if the buyer walks away.

What can lose your deposit

The seven most common ways Canadian buyers forfeit an EMD in Florida transactions are also the most preventable.

Missing the EMD wire deadline. The contract typically requires delivery within three days of the effective date. If the wire arrives on day four because the buyer initiated it on day three, the seller can declare default and terminate the contract, retaining the right to claim damages. The Canadian fix is to wire on day one or two, not day three.

Wiring to a fraudulent account. Real estate transactions are a primary target for business email compromise (BEC). The FBI's Internet Crime Complaint Center reported USD 2.77 billion in BEC losses across 21,442 complaints in 2024 alone, and real estate is among the most-targeted sectors. The scheme is straightforward: fraudsters intercept email between buyer and escrow agent, send forged wire instructions, and the funds disappear within hours of arrival in the criminal's account. Recovery is possible only when reported within hours.

Cancelling after the inspection period. The 15-day inspection window is generous but unforgiving. After day 15, the buyer cannot back out citing inspection issues without forfeiting the EMD, even if a serious defect is later discovered.

Sending the deposit directly to the seller. This forfeits Florida's statutory escrow protections. A Florida seller cannot legally hold the EMD in their own account; if they do, the buyer has no statutory recourse and must rely on civil litigation if the deal collapses.

Sending less than the contract amount. A USD 5,000 contract amount funded with a USD 4,500 wire (because of a CAD-USD conversion shortfall or wire fees) is technically a default, and gives the seller leverage at closing or grounds to terminate.

Confusing calendar days with business days. The FAR/BAR contract uses calendar days for buyer-side deadlines (so weekends count) but the broker's escrow deposit obligation uses business days. Mixing the two leads to missed deadlines.

Cancelling a financing-contingent contract after the loan approval deadline. Once the loan approval period expires without a written notice from the buyer that financing has failed, the financing contingency is generally deemed waived. If the loan later falls through, the EMD is at risk.

Letting an additional deposit clause slip. Some Florida contracts call for a second deposit (often labelled "additional deposit") within three days after the inspection period ends. Missing that deadline is the same default as missing the initial EMD wire.

How disputes are resolved

When a Florida deal collapses and both parties claim the EMD, neither the broker nor the title company can simply pick a side. Florida Statutes § 475.25(1)(d) and FAC Rule 61J2-10.032 establish a four-track resolution process for broker-held escrow.

Once a broker receives conflicting demands or develops a good-faith doubt about who is entitled to the funds, the broker must notify FREC in writing within 15 business days. Within 30 business days of the demand or doubt, the broker must initiate one of four settlement procedures: request an Escrow Disbursement Order from FREC; submit the dispute to arbitration with the consent of all parties; file an interpleader action in court; or, with written consent of all parties, submit the matter to mediation. Mediation must be successfully completed within 90 days of the last demand or the broker must employ one of the other procedures.

If a title company holds the funds, the FREC notification requirement does not apply. Title companies typically require a fully executed release and cancellation signed by both buyer and seller before disbursing. If the parties refuse to sign, the title company may deposit the funds with the local clerk of court and let the parties litigate entitlement.

The Escrow Disbursement Order is the most efficient track when the facts are clear. FREC reviews the contract and the documentary record and issues a written order designating one party as entitled to the funds. The broker who follows the EDO is shielded from administrative complaint for the disposition.

Worked example: a USD 600,000 Boca Raton condo

A Quebec couple signs a FAR/BAR AS-IS contract on April 1, 2026 to buy a resale condo in Boca Raton for USD 600,000. The contract specifies a 2% EMD (USD 12,000), a 15-day inspection period, a 30-day loan approval period, and a 60-day closing.

The effective date is April 1. The EMD must reach the escrow agent (a Boca Raton title company) by April 4. The buyers wire USD 12,000 from their Canadian bank on April 1 and the funds arrive April 2. The title company sends written confirmation of receipt.

The inspection runs from April 2 to April 16. On April 14, the inspector finds USD 18,000 of deferred maintenance the seller will not remediate. The buyers send written termination notice on April 15. The title company refunds the USD 12,000, less any wire fees on the return path.

Alternative scenario: the buyers proceed past April 16, but on May 5 their foreign-national mortgage is denied because of an underwriting issue. If the buyers sent the lender's denial letter to the seller in writing before the loan approval deadline (April 30), the EMD is refunded under the financing contingency. If the buyers waited until May 5 (past the deadline), the financing contingency is deemed waived and the seller is generally entitled to retain the USD 12,000.

Final scenario: the deal closes on May 31. The USD 12,000 is credited at closing toward the USD 600,000 purchase price plus closing costs (Florida closing costs typically run 2% to 5% of the price for the buyer side). The buyers wire the balance, sign at the title company, and take title.

Wire fraud: the Canadian buyer's largest practical risk

The legal mechanics of EMD escrow are well-established. The operational risk is the wire transfer itself, and Canadian buyers are particularly exposed for two reasons. First, the wire originates in Canada, so the Canadian bank's fraud detection systems do not have visibility into the receiving Florida account's history. Second, cross-border wire reversal is materially harder than domestic.

The standard scheme: a fraudster compromises the email account of the title company, the broker, the closing attorney, or the buyer's own agent, then waits for an EMD to be triggered. At the right moment, the fraudster sends a spoofed email from a near-identical domain (one letter changed, or a different TLD) with "updated" wire instructions. The Canadian buyer wires to the fraudster's account, often a US-based shell, and the funds are moved out within hours.

The protocol for a Canadian buyer is rigid. Before wiring, call the escrow agent at a number obtained from a separate trusted source (the FAR/BAR contract, the broker's verified business card, the firm's official website found via independent search, not from any email). Confirm the routing number, account number, and beneficiary name verbally. Do not trust any wire instruction received by email, even from a known correspondent, without verbal verification. After wiring, call the escrow agent the next business day to confirm receipt. If the funds are not confirmed within 24 hours, escalate immediately to your Canadian bank to attempt recall.

Actionable checklist for a Canadian buyer

1. Before signing, confirm the escrow agent named in the contract (title company, attorney, or broker) and verify their license status with the Florida Department of Business and Professional Regulation.
2. Obtain wire instructions in writing on the escrow agent's letterhead and verify them by phone using a number obtained independently.
3. Initiate the wire at least one business day before the contractual deadline to absorb any FX or banking delay.
4. Confirm USD-denominated amount matches the contract exactly; cover any wire fees from a separate transfer.
5. Obtain a signed receipt from the escrow agent within 24 hours of the wire arriving.
6. Calendar every deadline that runs from the effective date: EMD due, inspection ends, loan approval ends, additional deposit due, closing.
7. Use a Florida real estate attorney to review the contract before signing, especially on pre-construction condos or new builds where the FAR/BAR form does not apply.
8. Treat the inspection period as a hard deadline; if you have any doubts about the property, terminate before the window closes.
9. Read every email about wire instructions twice and verify by phone before acting.
10. Keep all written communications, receipts, and termination notices in a single transaction file in case of a later dispute.

Frequently asked questions

Can I pay the EMD in Canadian dollars? No. Florida escrow accounts hold US dollars. The conversion happens at the Canadian originating bank, and the receiving account expects the contract amount in USD. Account for FX and wire fees so the arriving amount is not short.

Can I pay by credit card? Generally no. Wire transfer is the standard and expected method. Some title companies accept certified bank check or cashier's check, but credit cards introduce chargeback exposure that escrow agents avoid.

Will I earn interest on the deposit? Generally no in standard residential brokerage escrow. The default FAR/BAR contract states that no interest is paid on the EMD unless the parties agree otherwise. Pre-construction condo deposits under § 718.202 may earn interest, which the developer is entitled to receive at closing.

What happens if a hurricane hits between contract and closing? The casualty loss clause (FAR/BAR Paragraph 10) allows the buyer to terminate if the property is significantly damaged before closing, with a refund of the EMD. The clause sets a damage threshold (typically 1.5% of the purchase price) above which the buyer can elect to cancel.

How does the EMD interact with my foreign-national mortgage? The financing contingency, if included, protects the deposit if the loan is denied within the loan approval period. After that period expires, the deposit is at risk regardless of financing status. Foreign-national mortgages take longer to underwrite than domestic loans, so buyers should negotiate a longer loan approval period (often 45 days rather than 30) at contract drafting.

Is there a Canadian tax consequence to the deposit? No. The EMD is not income to the buyer or seller. It is consideration applied to the purchase price, which itself is not a taxable event for a Canadian buyer at the time of acquisition. Canadian capital gains tax applies later, on disposition of the property.

What if the seller refuses to release the deposit after I cancel inside a contingency? The escrow agent cannot release the funds without a release signed by both parties or one of the four statutory dispute resolution procedures (EDO, arbitration, interpleader, mediation) for broker-held funds. Title-company-held funds typically end up with the clerk of court if the parties cannot agree. Plan to consult a Florida real estate attorney if the seller refuses to sign a release.

Does FIRPTA apply to my EMD? No. FIRPTA is a US federal withholding rule that applies to the seller (the foreign person disposing of US real property) at closing, not to the buyer's deposit. As a Canadian buyer, FIRPTA is not your concern until you eventually sell the property.

Educational disclaimer

This page is published by canadaflorida.com as a general educational reference for Canadian readers interested in real estate transactions in Florida. It does not constitute legal, tax, accounting, mortgage, immigration, or real estate brokerage advice. No professional relationship is created between the reader and canadaflorida.com or its editorial team by virtue of reading this page.

The information here reflects Florida law, federal US law, the FAR/BAR Residential Contract for Sale and Purchase, OACIQ standard forms, and Quebec law as understood at the last reviewed date stated in the article header. Real estate law and contract forms are amended periodically. The reader bears responsibility for verifying current rules with a Florida-licensed professional before making any transactional decision.

Every transaction has facts that this general reference cannot anticipate. Consult a Florida-licensed real estate attorney, a CPA with cross-border tax expertise, a Florida-licensed real estate broker, and your Canadian financial and legal advisors before signing a contract, wiring funds, or making any irrevocable commitment. For pre-construction condo or new-build purchases, this consultation is especially important because the contract form is developer-drafted and the FAR/BAR protections do not apply.

External links are provided for reference only. canadaflorida.com is not responsible for the content of external sites or for changes to those sites after publication. Florida-side citations are to Florida Statutes, the Florida Administrative Code, the Florida Real Estate Commission, the Florida Department of Business and Professional Regulation, and the Internal Revenue Service. Canadian-side citations are to OACIQ, the Civil Code of Quebec, and federal Canadian sources where applicable. Other Canadian provinces operate under different real estate brokerage and trust account regimes; coverage of Ontario, British Columbia, and Alberta analogues is forthcoming.

The publisher disclaims all liability for actions taken in reliance on this page.

Articles connexes à créer:

1. FAR/BAR AS-IS contract: the 15-day inspection contingency for Canadian buyers (chapter: acquisition). Angle: how the inspection period works in practice, what notices to send, how to extend it, and what defects justify termination versus what does not.
2. Wire transfer fraud (BEC) prevention for cross-border real estate closings (chapter: banking). Angle: the BEC scheme mechanics, the verification protocol, what to do if a wire goes to a fraudulent account, and the FBI IC3 reporting path.
3. Pre-construction condo purchases in Florida for Canadian buyers (chapter: acquisition). Angle: how § 718.202 escrow rules apply, milestone deposits, developer agreement red flags, and why these contracts are not FAR/BAR.
4. Title company versus real estate attorney as closing agent in Florida (chapter: acquisition). Angle: how to choose, fee impact, deposit handling differences, and when each is preferable for a Canadian buyer.
5. Reading the FAR/BAR Residential Contract: a translation for Quebec buyers familiar with the OACIQ promesse d'achat (chapter: acquisition). Angle: clause-by-clause comparison of the two standard forms and where the Florida defaults differ from Quebec's.
6. Foreign-national mortgages in Florida: the 30-day loan approval window (chapter: acquisition). Angle: how the financing contingency interacts with foreign-national lender timelines, why 30 days is often too short, and how to negotiate the window at contract drafting.