A dental practice escrow deposit should not be sent until the buyer understands who holds it, what instructions control it, when it may be released, and what happens if the purchase does not close. The amount alone tells you little about those protections.
Use the following as a discussion checklist for transaction counsel and the escrow provider, not as legal advice or a substitute for the signed agreement. There is no universal deposit percentage, refund right, or release deadline that this article can safely apply to every practice purchase.
Identify the deposit's exact purpose
Ask counsel to distinguish an earnest-money deposit, a payment made directly to the seller, a lender-required contribution, and an amount held back after closing. Similar labels can conceal different rights.
Connect the deposit to the actual purchase agreement and any relevant letter of intent. Record the controlling document version and what happens if documents describe the same payment differently. Resolve conflicts before sending funds.
A useful deposit summary names:
- the payer and transaction;
- the holder and verified contact;
- the amount and required receipt date;
- the account or other permitted custody arrangement;
- the document governing release and return;
- the person authorized to give instructions;
- fees and any agreed allocation of interest.
Keep banking details in the approved secure transaction channel, not in a general project checklist.
Ask what must happen before release
Have counsel explain each release event in plain language. Does release require joint instructions, closing confirmation, a particular signed certificate, or another specified condition? Who checks that the condition actually occurred?
Do not assume that an expected closing date authorizes payment. Ask how amended closing dates affect the instructions and whether the holder needs a new document.
Check how the deposit appears on the closing statement. It should be clear whether it reduces the buyer's remaining amount due, is applied to a specific obligation, or has another agreed treatment. The closing checklist should reference this reconciliation without duplicating sensitive payment information.
Understand the unsuccessful-deal route
Discuss at least three possible outcomes: the buyer properly exercises a contractual termination right, the parties disagree about compliance with a condition, or both parties agree to end the transaction.
For each, ask what notice is required, who receives it, how receipt is documented, and what the holder may do while instructions are disputed. Do not infer that a financing problem or unsatisfactory inspection automatically entitles the buyer to a refund.
Have counsel identify the applicable dates and notice mechanics. A conversation saying that everyone understands is not equivalent to the document required by the agreement.
Verify funds instructions independently
Payment instructions can be impersonated even inside a familiar email thread. The FBI advises independently verifying payment requests and changes to account numbers or payment procedures. Use an established contact channel rather than the phone number supplied in the change request. FBI business email compromise guidance
Confirm the destination with the authorized recipient before release. Follow the bank's procedures and your adviser's controls. If instructions change at the last moment, stop the transfer while the change is authenticated; the approaching deadline is not verification.
Keep a deposit evidence packet
Retain the executed instructions, confirmation that the deposit was received, relevant amendments, authorized release or return instructions, and the final statement showing how it was applied.
For example, if a fictional closing moves two weeks later, the buyer should ask whether the existing instructions remain valid and how any notice deadline changes. Simply changing a calendar entry does not amend the agreement.
The deposit review is complete when the buyer can explain the custody, release, return, and dispute paths—and the signed documents support that explanation.
