Definition
Your earnest money is held by a neutral third party (usually a title company) who keeps it safe until closing, at which point it's applied to your purchase. This protects both you and the seller.
Where you’ll meet it
What happens after they say yes?
See it in Buying my first home · Step 5About this term
Escrow agent holds earnest money neutrally. Releases at closing or contingency resolution. Protects both parties. Earnest money accountable. Dispute resolution through escrow agent. Title company typically holds escrow. Escrow instructions detail release terms. Non-refundable earnest money held for breach. Refundable earnest money held until contingency satisfaction. Professional handling standard. Required for most transactions.
Pro Tip
Earnest money escrow provides neutral protection. It's standard practice and protects both parties.
Example
Earnest money was held in escrow releasing at closing.