When must a broker return earnest money to a buyer?

A broker must return earnest money to a buyer if an accepted offer does not close and there are no expenses incurred. This scenario typically occurs when the contingencies outlined in the purchase agreement are not met, or if the closing does not happen for reasons not attributable to the buyer.

In such cases, unless there is a specific agreement stating otherwise, the earnest money is to be refunded to the buyer because it was given in good faith to secure the transaction. The absence of expenses means that the broker has not absorbed any costs that would warrant keeping the earnest money under these circumstances. Therefore, the broker is obligated to return it to promote fairness and accountability in real estate transactions.

In contrast, an option like requesting earnest money back does not automatically imply the broker has to comply if the terms of the agreement do not support that. Similarly, if the seller backs out but certain conditions apply (like those stated in a contract), the earnest money might not be returned if applicable expenses were incurred. Lastly, a declined offer does not usually warrant returning earnest money, as the buyer is not at an advanced stage of purchasing the property where earnest money would have been applicable.