Before a binding contract is formed, who owns escrow funds?

• A. Seller
• B. Buyer
• C. Broker
• D. Jointly owned by buyer and broker

Answer: (B)

The main idea is that earnest money is the buyer’s money. When an offer is made, the funds are placed in escrow to show serious intent, but no contract is binding yet. The broker or escrow agent holds the money in trust for the buyer and remains under a fiduciary duty to protect and eventually disburse it according to the contract terms. The seller doesn’t own those funds before a contract is formed, and the broker isn’t the owner either—the ownership stays with the buyer until the deal is finalized or properly terminated.