Protecting Your Earnest Money: What Illinois Buyers Should Know from Offer to Closing

Joseph S. Angelillo • October 29, 2026

Once a seller accepts your offer, one of the first things you will be asked to do is deliver your earnest money. It helps to know where that money goes and what protects it.


This guide walks through earnest money from offer to closing for Illinois buyers, with a focus on Kane and DuPage Counties, where residential deals typically use the Multi-Board Residential Real Estate Contract 8.0. It updates and expands on our earlier post, When Can Home Buyers Terminate Their Real Estate Contract and Get Their Earnest Money Back in Illinois.


This post is general information, not legal advice.


What Is Earnest Money?


Earnest money is a good-faith deposit. It shows the seller you are serious about buying. It is not an extra fee, and at closing it is credited toward what you owe.


Under Paragraph 3(b) of the Multi-Board 8.0 contract, the amount and the delivery deadline (a set number of Business Days after the Date of Acceptance) are filled in on the form. There is also an optional line for additional earnest money by a later date.


How Much Is Typical?


There is no required amount. Earnest money is set by negotiation. In our area it is usually a flat dollar amount rather than a percentage of the price. Deposits of several thousand dollars are common, and $5,000 is a figure we see often.


The right number depends on the price, the competition, and the seller's expectations.


Who Holds the Money?


The person or company holding the deposit is called the "Escrowee." Paragraph 3(b) says the money is held "in trust for the mutual benefit of the Parties" and gives three checkboxes: the Seller's Brokerage, the Buyer's Brokerage, or as otherwise agreed by the Parties.


In practice, the listing brokerage usually holds it. Even when a title company handles the closing, the earnest money is often held outside the title company's escrow.


When a brokerage holds the funds, Illinois law sets rules. The Real Estate License Act (225 ILCS 454/20-20(a)(17)) and its rules (68 Ill. Adm. Code 1450.750) require brokers to keep escrow money in a special account, separate from their own funds.


Get a receipt for your deposit, and confirm any wire instructions by phone using a number you already know.


How Contingencies Protect Your Deposit


Think of each contingency as a window. If you act inside the window, in writing, your deposit is generally protected. If the window closes, the protection can disappear. The deadlines below apply by default under the form; your contract may differ.


Attorney Review (Paragraph 13)


The attorney review period gives the attorneys five Business Days after the Date of Acceptance to approve, disapprove, or propose changes. If proposed changes are not resolved in writing within ten Business Days, either party may terminate by Notice.


Inspection (Paragraph 15)


If you choose the inspection option, you generally must serve Notice of major-component defects within five Business Days (ten calendar days for a lead-based paint inspection). If no written agreement is reached within ten Business Days, either party may terminate. Missing the deadline waives your right to terminate under this paragraph. Asking for cosmetic or minor items can give the seller the right to terminate, with your earnest money returned.


Financing (Paragraph 8)


The Financing Contingency Date is the earlier of 45 days after acceptance or five Business Days before closing. If your loan is denied in writing and you give timely Notice, the contract is null and void. If you have not received approval by that date, timely Notice makes the contract voidable by either party. If neither party acts, the contract continues without a financing contingency.


Appraisal (Paragraph 37)


The main form does not include an appraisal contingency. It comes through the optional Appraisal Addendum, checked in Paragraph 37. The addendum lets the parties choose in advance what happens if the appraisal comes in low: the buyer pays the gap, the buyer pays the gap up to a set cap, or the buyer may terminate. A buyer who terminates must, if asked, certify the appraised value before the earnest money is returned.


In attorney review, our firm often requests that the contract remain contingent on the property appraising for at least the purchase price.


Title (Paragraph 20)


The seller must deliver a title commitment and remove or insure over unpermitted exceptions. If the seller cannot, the form lets the buyer take title with a price deduction for encumbrances of a definite or ascertainable amount. The form does not give the buyer an express right to terminate over title problems, so that right would have to be added in attorney review.


Getting Your Money Back


Under Paragraph 27, when a contract is terminated or declared null and void, the earnest money is refunded "upon the joint written direction by the Parties to Escrowee or upon an entry of an order by a court of competent jurisdiction." The money does not move on its own.


That is why a signed Mutual Cancellation Agreement matters. The Multi-Board form states:


"Disbursement of the Earnest Money is subject to the written direction of the Seller and Buyer only or as otherwise provided by law and not upon the oral or written direction of any of the real estate professionals involved in the transaction."


An agent's email is not enough. If the buyer and seller cannot agree, the dispute may have to be resolved in court. Any termination Notice should be in writing and served as Paragraph 28 requires.


What Can Put Your Deposit at Risk


  • Missing a contingency deadline, even by one day.
  • Leaving inspection or financing options blank, or waiving them without understanding the effect.
  • Not applying for your loan on time. Under Paragraph 8, the seller may be able to terminate if you have not applied within ten Business Days.
  • Not delivering the deposit, or any additional deposit, on time.
  • Walking away for a reason the contract does not cover.
  • Sending money to fraudulent wire instructions.


The form itself does not limit a seller's damages to the earnest money if a buyer defaults. In our attorney review letters, our firm often requests that the seller's damages in the event of buyer default be limited to retention of the earnest money as liquidated damages. This is a term we negotiate for, not standard form language, and a seller may not agree.


At Closing: Your Deposit Becomes a Credit


Paragraph 3(c) says the balance due at closing is the purchase price, plus or minus prorations, less earnest money paid, less any credits. Look for your deposit as a credit on your closing statement. The rest is paid in "Good Funds" as defined by Illinois law (215 ILCS 155/26). Your title company will confirm accepted payment methods.


How an Attorney Helps


A real estate attorney tracks each deadline from the Date of Acceptance, serves written Notices on time, negotiates inspection and appraisal issues, and works toward a signed release if a deal ends.


This post is general information, not legal advice.


If you are in the process or are interested in buying or selling a home, please contact me immediately for your free consultation. https://www.angelillolaw.com/contact


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