Earnest money is a deposit paid—often into an escrow account—to show a good-faith intention to complete a transaction—often a transaction for the purchase of real property (real estate).

If the prospective buyer defaults and fails to complete the transaction for the purchase of the real property (fails to close) the earnest money is usually forfeited and delivered to the would-be seller under the terms of the contract or agreement for the sale of the property.

Earnest money is generally not required for a valid contract for the purchase and sale of real property, but is often included to compensate the prospective seller for time and potential missed sales opportunities while the sale was “under contract” with the prospective buyer.

Earnest money may also be referred to as earnest; bargain money; caution money; hand money; or down payment.

In Nebraska, earnest money is a deposit made by a prospective buyer to demonstrate their serious commitment to completing a real estate transaction. It is typically held in an escrow account during the period between the acceptance of the offer and the closing of the sale. If the buyer fails to fulfill their obligations under the purchase agreement and the transaction does not close, the earnest money is usually forfeited to the seller, as per the terms outlined in the contract. While earnest money is not a legal requirement for a valid real estate contract in Nebraska, it is a common practice to provide assurance to the seller that the buyer is acting in good faith and to compensate the seller for taking the property off the market during the negotiation period. The amount and conditions regarding the forfeiture or return of earnest money should be clearly stated in the purchase agreement to avoid disputes. Nebraska state statutes and federal law do not prescribe a specific amount for earnest money, leaving it to the discretion of the parties involved in the transaction.