An Earnest Money Deposit is a predetermined amount of money that the buyer deposits with the escrow company handling the transaction after the buyers offer has been accepted. The EMD (Earnest Money Deposit) which is sometimes referred to as a good faith deposit, but differs in that good faith deposits are typically held by the buyers lender, instead of the escrow company handling the transaction. In California an EMD is the typical instrument used and once the escrow closes the EMD funds are rolled into the buyers downpayment amount. The EMD also acts as a security deposit for the seller. In the case of the buyer cancelling the sale after their contingencies are removed, the seller does have the right to keep the EMD funds. That doesn't happen that often because most buyers would complete all of their due diligence prior to removing their contingencies and would be consciously choosing to cancel the escrow and risk forfeiting their EMD. For the record, I have never had a client lose an EMD check, and I don't plan on that changing anytime soon! If you have any questions or would like to know more just let me know! | 
