When would a firm be unable to disburse earnest money?

A firm would be unable to disburse earnest money primarily when the earnest money is under dispute. In this scenario, the earnest money is not simply being held for safekeeping; rather, there is contention regarding who is entitled to it or under what conditions it can be released. Disputes can arise for various reasons, such as disagreements over contract terms or the fulfillment of specific conditions outlined in the purchase agreement.

If the buyer and seller disagree on terms, it may necessitate negotiations or amendments, but it does not inherently prevent the firm from disbursing earnest money if the terms are eventually resolved. Similarly, in the case where the contract is mutually canceled, the earnest money can often be disbursed according to the cancellation conditions outlined in the contract. Likewise, if a buyer fails to qualify for financing, it might complicate the transaction but does not directly lead to a hold on earnest money if the cancellation or refund clauses are appropriately invoked. Therefore, the presence of a dispute is a clear reason for a firm to be unable to disburse earnest money.