Full Definition
Earnest money (also called escrow deposit) is a good-faith deposit from buyer to seller at contract execution. It's held by a neutral third party (usually title company) until closing. Typically 1-5% of purchase price. Refundable while due diligence contingencies remain; becomes non-refundable ('goes hard') when contingencies expire.
Related Terms
PSA (Purchase and Sale Agreement)
The binding contract that governs a commercial real estate transaction. Drafted after LOI acceptance.
Due Diligence
The investigation period after contract signing, typically 30-90 days, when buyer inspects everything about the property.
Going Hard
The moment earnest money becomes non-refundable, typically at end of due diligence period.