Who holds the earnest money?
Usually the seller’s agent will deposit the earnest money in a trust or escrow account until closing. At closing, the earnest money is applied to the total purchase price including closing costs. The trust or escrow account will be managed by an independent third party in most cases, e.g., a title company or real estate attorney who conducts closings. Earnest money deposits cannot be released if a transaction does not reach closing without the express consent of both the Buyer and the Seller. In the event the sale does not close, the sales contract generally spells out the conditions under which you would forfeit the earnest money. Generally, if the seller meets all the terms of the contract, the seller will keep the earnest money. If the seller does not meet the terms of the contract, then you, as the buyer, receive a total refund of the earnest money. The best advice is to read your sales contract thoroughly and get your questions answered before you complete the offer. If you’re not
