Earnest Money vs Direct Deposit?

[Arturo Fuentes]

Hello there!

I need some clarity from you more seasoned investors. I have been working with a wholesaler company in the Houston area. I have one deal going on with them (assignment of contract) and trying to get the second one going. For this second one, they want to do a double close, they did the first one an assignment "as a favor" to get the relationship going. Here's the thing, it is the wholesalers "standard practice" to lock in the deal with a 5K deposit paid directly to them and to double close. In the event that they can't provide clear title, the would refund the money, but if I walk out of the deal, they keep it. Me and my associates are asking that the title company holds the deposit until closing, as an extra layer of protection for both parties. Wholesaler is against this, claiming that at that point the deposit would be considered earnest money, and both parties would have a claim to it. 

Am I missing something or why does this feel off? Wouldn't it be in everyone's best interest to have the title company involved?

Let me know your thoughts below. Thanks!