When should earnest money be deposited into a trust account?

The earnest money should be deposited into a trust account in a timely manner, according to state laws. This practice is essential because earnest money serves as a demonstration of the buyer's commitment to the transaction and helps protect the interests of all parties involved. Timely deposition ensures that the funds are secure and that they are handled according to regulatory requirements, contributing to the integrity of the transaction.

State laws typically dictate specific time frames for depositing earnest money, often within a few days of the purchase agreement being signed. This requirement helps to establish transparency and accountability within real estate transactions, fostering a trust relationship between buyers, sellers, and agents.

In contrast, waiting until the end of the transaction, after the buyer has completed financing, or after the closing date neglects the established protocols and could lead to misunderstandings or legal complications. Proper timing in handling earnest money is a critical step in maintaining the smooth progression of a real estate deal.