When a home purchase falls apart, buyer and seller sometimes disagree about who keeps the earnest money. The party holding the deposit, usually an escrow company or a brokerage, typically cannot simply pick a side. This guide explains the difference between who is entitled to the money and when the holder can release it, and what you can do next.
It is general information, not legal advice. Deadlines matter; read the current statute and your contract, and talk with an attorney about your situation.
Who is entitled vs whether escrow can release it
Your purchase agreement decides who is entitled to earnest money in different situations, such as a properly exercised contingency or a default. The holder's ability to release the funds is a separate question. Holders usually release on written instructions signed by both parties, on a court order, or through a procedure the law provides. That is why a deposit can sit in escrow even when one side feels the contract is clear.
After a demand: notices, deadlines and objections
Once a holder (a real estate firm, escrow agent or title company) receives a written demand for the deposit, Washington law sets a timeline. Read any notice you receive right away, note the date it was sent, and calendar the deadlines. Missing the objection deadline means the holder must release the money to the party who demanded it.
What RCW 64.04.220 provides, in general terms
RCW 64.04.220 applies to earnest money for residential real property held under an executed purchase and sale agreement. It sets deadlines the holder must follow; it does not let a deposit sit indefinitely once an objection is made. An interpleader is a lawsuit in which the holder deposits the money with the court and the court decides who receives it.
| Step | What RCW 64.04.220 requires |
|---|---|
| 1. Holder receives a written demand | Within 15 days the holder must do one of three things: notify all other parties in writing (including a copy of the demand), release the earnest money, or start an interpleader action. |
| 2. Holder's notice | The notice tells the other parties they have 20 days ("day" means calendar day) from the date of the notice to send a written objection to the address it specifies, and that without a timely objection the money will be released to the demanding party. |
| 3. When the 20 days start | When the holder mails the notice by U.S. Postal Service and sends it by email, using the addresses in the holder's records. The holder must keep evidence of mailing. |
| 4a. No timely objection | The holder must deliver the money to the demanding party within 10 days after the 20-day period ends. |
| 4b. Timely objection or inconsistent demand | The holder must not release the funds and must start an interpleader action within 60 days of receiving it, unless the parties later give consistent instructions to disburse or to hold off for a specified period. |
| Any time | The holder may interplead the money at any point, even before the 20 days run. |
If the holder starts an interpleader action, the court must award the holder its reasonable attorneys' fees and costs. How that cost is ultimately borne between buyer and seller depends on the court, the law and your contract; ask counsel rather than assuming. This is a summary as of October 2026; read the current statute and your notice.
Statements such as "escrow can never release without both signatures" or "you will always get your deposit back" are not accurate as general rules.
Negotiation, attorney help and interpleader
| Path | What it means | Consider |
|---|---|---|
| Negotiated release | Both sides sign instructions, possibly splitting the deposit | Often the fastest route; get it in writing |
| Agreed pause | Both sides give the holder consistent written instructions to hold off on interpleader for a specified period | Only by mutual instruction, and only for the period stated |
| Statutory procedure | Holder follows the RCW 64.04.220 timeline above | An objection stops release and leads to interpleader within 60 days; it does not keep funds held indefinitely |
| Interpleader | Holder deposits funds with a court, which decides | The court must award the holder reasonable attorneys' fees and costs; ask counsel how that may affect you |
| Contract dispute resolution | Mediation or arbitration if your contract requires it | Check the agreement for these clauses |
Keep the evidence
- Signed purchase agreement and all addenda
- Proof of deposit payment and receipt
- Every notice sent or received, with dates and delivery method
- Inspection reports, lender letters or other documents tied to a contingency
- Emails and texts with brokers, escrow and the other party
Settlement math with hypothetical numbers
This is a worksheet. The figures are hypothetical and the blanks are for you to fill in, used only to show how to think about a settlement. They are not estimates of legal fees or predictions of who would win.
| Hypothetical input | Value |
|---|---|
| Deposit in dispute | $20,000 |
| Offer to split | $10,000 each |
| Your estimated cost to pursue (from counsel) | $______ |
| Months until resolution | ______ (ask counsel) |
| Amount you would receive in a settlement, minus your own estimated costs | $______ |
Compare the settlement offer with the realistic net result after your own costs and time, as estimated by an attorney.
Frequently asked questions
Can escrow release my earnest money without the other party's signature?
Yes, if the holder follows RCW 64.04.220 and receives no timely written objection; the holder must then release the money to the demanding party within 10 days after the 20-day period ends. If a timely objection or inconsistent demand arrives, the holder must not release it and must start an interpleader action within 60 days, unless both parties give consistent instructions.
How long do I have to object?
20 calendar days from the date of the holder's notice. The period starts when the holder mails the notice by U.S. mail and sends it by email. Send your written objection to the address in the notice, and confirm the dates with counsel.
Who decides if both sides object?
If the holder files an interpleader, the court decides. The parties can also resolve it by signed agreement, and your contract may require mediation or arbitration of the underlying dispute.
Sources
This article is general information, not legal, tax or lending advice. Rules and program terms change; confirm details with the relevant professional and the current official source.
