Earnest money deposits are typically payable to which party and presented with the contract?

• A. Listing Brokerage Firm
• B. Seller
• C. Buyer
• D. Title Company

Answer: (A)

Earnest money is a buyer’s good-faith deposit that accompanies the purchase contract to show commitment and provide the seller with assurance that the buyer intends to complete the deal. In Colorado practice, this deposit is typically paid to the listing brokerage firm (the seller’s broker) and held in the broker’s trust or escrow account. The funds are then applied toward the purchase price at closing, unless the contract terms specify otherwise or the deal falls through according to the agreed contingencies. This arrangement keeps the money in a controlled, neutral place and makes it straightforward to release or apply the funds as the contract requires.