Buying a condo in the Chicago Loop can move fast. You want your offer to stand out without putting your deposit at risk. That is where earnest money comes in. When you understand how it works in downtown buildings, you can make a strong offer and keep your options open if something does not check out. In this guide, you will learn how much to put down, who holds the funds, the timelines that matter, and the contingencies that protect you. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you make after your offer is accepted. It shows the seller you are serious and it is credited back to you at closing. You will see it applied to your purchase price, down payment, or closing costs according to your contract.
To picture the numbers:
- $300,000 unit: 1 percent is $3,000, 2 percent is $6,000.
- $500,000 unit: 1 percent is $5,000, 2 percent is $10,000.
- $1,000,000 unit: 1 percent is $10,000, 2 percent is $20,000.
There is no one-size deposit. The right amount depends on your price point, competition in the building, and how your other terms line up.
How it works in the Loop
In Chicago, a neutral escrow holder keeps your funds until closing or release. In the Loop, the escrow holder is most often a title company or an attorney’s escrow account. A broker trust account can be used if the contract calls for it, but larger deposits typically go to a title company that will also handle the closing.
Your contract will set the delivery deadline. A common window is within 1 to 3 business days after both parties sign. Many buyers wire the deposit or deliver a cashier’s check quickly to meet the deadline and show readiness.
Accepted forms include wire transfer, cashier’s check, or certified funds. Personal checks may be allowed at first, but larger sums are usually replaced with wired funds. To prevent wire fraud, always verify wiring instructions by calling your escrow or title contact at a known phone number before you send any money.
How much to offer in the Loop
Across many markets, earnest money is commonly 1 to 3 percent. In competitive downtown condo and loft buildings, you often see 2 to 5 percent to strengthen an offer. If a building expects multiple offers, a larger deposit can help your offer signal commitment. Balance that with your risk tolerance and your contingency protection.
A simple rule of thumb: if you are competing, consider the higher end of the range. If the market is slower or your terms are already very strong, you may not need to stretch your deposit.
Contingencies that protect your deposit
Contingencies are your safety net. If you cancel within a valid contingency period and follow the contract’s notice steps, your earnest money is typically refundable.
Inspection contingency
Most condo contracts include an inspection period, often 5 to 10 business days after acceptance. For condos, inspections focus on the unit’s interior and systems. Items in common areas are usually the association’s responsibility. If you are not comfortable with the results and you cancel within the inspection window per the contract, your deposit is generally refunded.
Condo documents review
Condo ownership is tied to an association, so your contract will include time to review bylaws, budget, meeting minutes, reserve details, and any resale or estoppel documents. Illinois condo law requires certain disclosures. Use this window to check for pending or planned special assessments, reserve strength, and rules that matter to you. If the documents reveal issues you are not comfortable with and you cancel on time, your deposit is usually returned.
Financing and appraisal contingencies
If you include a financing contingency, you will need to secure a mortgage commitment by the deadline to keep your deposit protected. The appraisal often happens early in this process. If the appraisal or loan underwriting does not align and you cannot satisfy the financing terms despite good-faith efforts, you can typically withdraw within the contingency and recover your earnest money.
Board approval when required
Some downtown buildings require buyer approval by a board. The process can take weeks. Contracts often include a board-approval contingency. If you are denied within the allowed time and you provide proper notice as required, your earnest money is generally refundable.
From offer to closing: a simple timeline
Every contract is different, but many Loop condo purchases follow a familiar rhythm:
- Earnest money delivery: within 1 to 3 business days after acceptance.
- Inspection period: commonly 5 to 10 business days.
- Appraisal ordered: soon after lender engagement, typically early in the process.
- Mortgage commitment deadline: often 21 to 30 days.
- Association documents and estoppel: allow 7 to 21 days, sometimes longer.
- Board approval if needed: plan for 2 to 6 weeks.
- Closing: many deals wrap in 30 to 60 days, depending on lender speed and association timelines.
Track your dates and deliver notices on time. That is how you keep your deposit protected while you move the purchase forward.
When you could lose earnest money
You can forfeit earnest money if you default after your contingencies are waived or expire. For example, if you fail to close without a contract-permitted reason, the seller may be able to keep your deposit as liquidated damages or seek other remedies, depending on the agreement.
Other risk points include missing a required deadline, failing to deliver documents or funds called for in the contract, or breaching other conditions. If a dispute arises, the escrow holder will usually hold the funds until both parties sign a release or a court issues an order. Outcomes depend on the exact contract language and timing, so when in doubt, consult an Illinois real estate attorney.
How to avoid problems with your deposit
A few simple habits can keep your earnest money safe while helping your offer stand out:
- Get a strong lender pre-approval that matches your timeline before you write.
- Confirm the association’s document turnaround time so your review window is realistic.
- Use a reputable title company for escrow and verify wiring instructions by phone.
- Keep contingencies in place until you are satisfied with inspection, documents, and financing.
- Calendar every deadline and send notices in writing before they expire.
- In multiple-offer situations, consider a larger deposit, but only if your contingency safety net fits your comfort level.
- If you are relocating, map your move dates against likely board approval and closing windows.
- Save receipts and confirmations for every transfer and delivery.
Where your earnest money goes at closing
At closing, your earnest money is applied to your side of the ledger. You will see it credited on your Closing Disclosure or settlement statement and it will offset what you need to bring to close. Ask the title company or your agent to point out the line item so you know exactly how it is used.
Local context for Loop condos and lofts
Many Loop buildings are part of large associations that handle documents and estoppels on a set schedule. Some loft conversions may have unique certificates or zoning history to confirm. Build a little extra time into your timeline for association responses and any building-specific approvals. Your contingencies exist to let you investigate these items before you commit fully.
Ready to move with confidence?
When you understand earnest money, you can write a cleaner, stronger Loop offer and protect your downside at the same time. If you want help calibrating deposit amounts, timelines, and contingencies for a specific building, we are here to guide you from offer to close.
Have questions about a particular Loop condo or approval process? Let’s talk through your plan and put a timeline together that fits your goals. Connect with Deborah Ballis Hirt for local guidance you can trust.
FAQs
How does earnest money work for Loop condos?
- It is a good-faith deposit held in escrow after your offer is accepted, then credited to you at closing or returned or forfeited based on your contract.
How much earnest money should I put down in the Loop?
- Many buyers use 1 to 3 percent, and 2 to 5 percent is common in competitive downtown buildings to strengthen an offer.
Who holds my earnest money in Chicago?
- A title company or an attorney’s escrow account most often holds the funds, as specified in the purchase agreement.
When do I need to deliver my earnest money?
- Your contract sets the deadline, commonly within 1 to 3 business days after both parties sign the agreement.
What contingencies protect my deposit on a condo?
- Inspection, condo document review, financing and appraisal, and board approval when required can all protect your deposit if you cancel on time per the contract.
Can I get my earnest money back if the board rejects me?
- Yes, if your contract includes a board-approval contingency and you provide notice within the allowed time.
How long does a Loop condo purchase typically take?
- Many closings occur within 30 to 60 days, with association documents and any board approval being the biggest variables.
Is wiring earnest money safe?
- Wiring is standard, but always verify instructions by calling your escrow or title contact at a known number to avoid fraud.
