Contracts
Under Colorado real estate law, 'earnest money' serves all of the following functions EXCEPT:
ADemonstrating the buyer's good faith intent to purchase
BBeing applied to the purchase price at closing
CGuaranteeing the seller will sell the property✓ Correct
DProviding compensation to the seller if the buyer defaults (subject to contract terms)
Explanation
Earnest money demonstrates good faith, is applied to the purchase price at closing, and may serve as liquidated damages if the buyer defaults. However, earnest money does NOT guarantee the seller will sell — the seller could also default, and the buyer's remedies would include return of earnest money plus damages.
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