Good faith deposit when selling a business questions come up in nearly every South Florida deal, usually right after a buyer’s letter of intent lands on the seller’s desk. The deposit itself is rarely more than a few percent of the purchase price, but how it’s handled says a lot about whether the deal is built to close.

What a Good Faith Deposit When Selling a Business Actually Signals

A good faith deposit tells a seller the buyer has skin in the game beyond a signature on a letter of intent. It doesn’t guarantee the deal closes, but a buyer who won’t put money into escrow, or who wants it refundable at will, is telling you something about how committed they really are. In South Florida business sales, deposits typically run 5% to 10% of the purchase price, higher for smaller deals where a buyer’s word alone carries less weight.

Where the Money Sits: Escrow, Not the Seller’s Pocket

The deposit does not go to the seller at signing. It sits in a neutral escrow account, typically held by the closing attorney, a title company, or the business broker’s trust account, until the deal closes or a contingency fails. Most South Florida business purchase agreements route the deposit through the broker or a transaction attorney rather than letting either party hold it directly, precisely because that neutrality is what makes the deposit meaningful.

Florida’s Rules on How Fast a Deposit Must Hit Escrow

Because most business brokers in Florida operate under a real estate broker’s license, the same escrow timing rules that govern home sales apply. A sales associate must turn deposit funds over to the broker by the end of the next business day, and the broker must deposit those funds into escrow within three business days. If a dispute arises over who’s entitled to the money, the broker has to notify the Florida Real Estate Commission within 15 business days rather than simply releasing funds to whichever party asks first. Sellers should confirm in writing which account holds their deposit and who the signatories are before they sign a purchase agreement.

What Happens to the Deposit If the Deal Falls Apart

This is where most disputes start. If a buyer walks away during a due diligence contingency period spelled out in the agreement, the deposit is usually refundable. If they walk away after diligence has cleared and financing is in place, the seller may be entitled to keep it, but only if the purchase agreement says so in plain terms. Vague deposit language is one of the most common gaps we see in South Florida business purchase agreements, and it’s the first thing worth tightening before a buyer’s check ever gets written.

How Much Should You Ask For?

There’s no fixed number, but the deposit should be large enough to sting if the buyer walks for no real reason, without being so large it scares off a legitimate first-time buyer. For most Main Street and lower-middle-market deals in Palm Beach, Broward, and Miami-Dade counties, that lands between $10,000 and $50,000, or a flat percentage tied to purchase price for larger transactions.

If you’re preparing to sell a South Florida business and want the purchase agreement’s deposit terms reviewed before you sign anything, John Diaz and the South Florida Business Sales team can walk you through it. Call 844-456-4647 for a free, confidential business valuation. Hablamos español.