Contracts
In Colorado, 'earnest money' serves as:
AA. The down payment
BB. A good-faith deposit demonstrating the buyer's serious intent to purchase, applied toward the purchase price at closing✓ Correct
CC. A non-refundable fee paid to the seller immediately
DD. The buyer's commission to their agent
Explanation
Earnest money is a good-faith deposit made by the buyer to demonstrate their serious intent to complete the transaction. It is deposited into an escrow/trust account and applied toward the buyer's funds due at closing.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Math Concepts
State-Specific Concepts
Trust Account Rules
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