In Kentucky, the recipient of an earnest money deposit held in escrow is typically determined by the terms of the purchase agreement. This agreement specifies who holds the funds, often a title company, real estate brokerage, or attorney. The designated escrow agent acts as a neutral third party, safeguarding the money until the transaction closes or other contractual conditions are met. For example, if the buyer fulfills all obligations, the funds are disbursed to the seller. Conversely, if the buyer legitimately terminates the contract per the agreement’s terms, the funds are returned to the buyer.
Secure handling of earnest money provides crucial safeguards for both buyers and sellers in real estate transactions. This impartial process helps prevent disputes and ensures funds are distributed fairly according to the agreed-upon terms. Historically, escrow practices evolved to protect parties involved in complex transactions by minimizing risk and providing a neutral intermediary. This system has become a standard practice in modern real estate, promoting transparency and building trust between parties.
