Who holds the earnest deposit money from the buyer until closing?

The correct answer is that the seller's attorney holds the earnest deposit money from the buyer until closing. In real estate transactions, the earnest money deposit is a show of good faith from the buyer, indicating their serious intent to purchase the property. The seller's attorney typically manages this deposit, placing it in escrow until the closing process is complete.

This method ensures that the funds are securely held and released only when the transaction has been finalized, providing protection for both parties involved. If the sale goes through successfully, the earnest money is usually applied towards the purchase price. However, if the transaction falls through for valid reasons as outlined in the purchase agreement, the buyer may receive their deposit back.

While the buyer's attorney, the real estate broker, and the title company can all play roles in the transaction, the responsibility for holding the earnest deposit typically lies with the seller's attorney, who maintains control over the funds during the escrow period to facilitate a smooth closing process. Each party's role is crucial in ensuring the integrity and success of the transaction, but the attorney managing the escrow is particularly critical to the formal handling of the earnest money.