Earnest money in Arizona is typically held by:
Question & Answer
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The seller
The seller cannot hold earnest money directly as this creates a conflict of interest and could lead to misuse of funds. Arizona law requires a neutral third party to safeguard these deposits until closing or contract termination.
The title/escrow company
The buyer's lender
The buyer's lender has no authority or responsibility to hold earnest money. These funds are separate from the mortgage loan and are not part of the financing arrangement.
ADRE
The Arizona Department of Real Estate (ADRE) licenses and regulates real estate professionals but does not hold or manage earnest money funds in transactions.
Why is this correct?
In Arizona, earnest money must be held by a neutral third party to protect both buyer and seller. Title and escrow companies are licensed by the state to serve as this neutral custodian, properly accounting for and disbursing funds according to the contract terms.
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