Which party typically holds the earnest money deposit until closing?

The earnest money deposit is a crucial part of the real estate transaction process, serving as a demonstration of the buyer's good faith in purchasing the property. Typically, the closing attorney holds the earnest money deposit until the actual closing of the transaction. This practice ensures that the funds are managed securely and impartially, which is essential in protecting both parties' interests.

The closing attorney is responsible for overseeing the closing process, which includes confirming that all contractual obligations are met before the transaction is finalized. By holding the earnest money, the attorney ensures that the funds can be appropriately allocated, either to apply toward the purchase price or to return to the buyer if the transaction does not proceed for valid reasons stipulated in the contract, such as contingencies not being met.

In contrast, other parties such as the buyer, seller, or real estate agent would not typically hold the earnest money due to potential conflicts of interest and a lack of impartiality in managing these funds. The role of the closing attorney is to facilitate a fair and lawful closing, making them the appropriate party to hold the earnest money deposit.