Earnest money is returned upon mutual agreement by buyer and seller.
In Colorado, the state real estate commission provides an appropriate form for real estate brokers to use with their clients called the earnest money release form.
Once the form is completed by buyer and seller, it is sent to the title company or the agent holding the earnest money, and the earnest money is distributed according to the form. This should take ten days or less.
In a normal contract termination situation, the buyer (or buyer’s agent) should send the earnest money release along with the termination notice. That way, the seller will hopefully sign off on both at the same time and move on.
Sometimes getting buyer and seller to mutually agree upon the earnest money can be tricky, if not impossible.
Many times, a contract is terminated due to one of the various exit clauses found within the contract…. Getting buyer and seller to sign off on the earnest money release form is usually a rubber stamp…
However, if a dispute arises over the earnest money, it is held until buyer and seller agree on what to do with it. However, the title company (or whoever has the earnest money) may very well get sick and tired of holding the earnest money, waiting for buyer and seller to agree on what to do, and so they ship it off to the courts and let them deal with it.
So, in a worst case scenario, a court order could also “release” the earnest money and it will distributed according to the court order.
Finally, if there is a dispute, buyer and seller can also arrive at an agreement by going through mediation or other methods before taking it to court.
Click Here to download an Earnest Money Release Form.
Click for more contracts or to make sure you are downloading the most current copy from the State of Colorado.
Colorado Division of Real Estates Approved Forms.
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