Earnest Money
A good-faith deposit a buyer puts down to show serious intent, held in escrow and applied at closing.
Quick flashcard
What does Earnest Money mean on the Texas real estate exam?
Answer: A good-faith deposit a buyer puts down to show serious intent, held in escrow and applied at closing.
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Earnest Money definition
Earnest money is a deposit a buyer provides to show good faith when making an offer. It is held in an escrow or trust account, not by the buyer or seller directly. At closing the deposit is typically credited toward the buyer's costs.
Earnest money is not required for a contract to be valid, but it signals commitment. In a Texas residential transaction, the buyer typically delivers earnest money to the escrow agent (often the title company) named in the contract, within the time the promulgated contract specifies.
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On the exam
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Texas Contracts & Forms (9 of 40 Texas State Law)
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Try 5 free questionsThis definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.