In Colorado, earnest money must be deposited:
Question & Answer
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Within 10 days
Answer A is incorrect because Colorado law does not impose a blanket ten-day earnest money deposit requirement; the timeline is determined by the contract itself, and ten days would be considered unusually long in standard Colorado residential transactions.
As specified in the contract, typically within 3 days
At closing only
Answer C is incorrect and would represent a serious breach of standard practice — depositing earnest money only at closing defeats the entire purpose of earnest money, which is to demonstrate the buyer's commitment early in the transaction and give the seller recourse if the buyer defaults.
No requirements
Answer D is incorrect because Colorado absolutely has requirements governing earnest money, including broker trust account rules under the Colorado Real Estate Commission regulations and contract-specified timelines that are legally binding once executed.
Why is this correct?
Answer B is correct because Colorado's standard Contract to Buy and Sell Real Estate, promulgated by the Colorado Real Estate Commission, specifies that earnest money must be deposited by the date stated in the contract, with the industry-standard practice being three business days from contract execution. Colorado Rule E-1 under the Real Estate Commission Rules requires that earnest money held by a broker be deposited in a trust account in a timely manner consistent with contract terms. This contract-driven approach means the specific timeline is a negotiated term, but the three-business-day convention is so widely used that it is effectively the default expectation in Colorado transactions.
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