Earnest Money in Colorado: How Much, When It's Due, and When You Get It Back

Earnest money is one of the first checks a Colorado homebuyer writes — and one of the least understood. It is not your down payment, it is not a fee, and Colorado law does not require a set amount. It is a good-faith deposit that shows a seller you are serious, and the contract you sign decides when it is due, who holds it, and whether you get it back if the deal falls apart. Here is how it works in the Denver metro.

What earnest money is

Earnest money is a deposit you make shortly after your offer is accepted. A neutral holder — usually the title company named in the contract, or a real estate brokerage — keeps it in an escrow account while the sale moves forward. The seller does not spend it, and you do not lose it just by making the deposit.

If the sale closes, the money is credited to you on the settlement statement and becomes the first part of your down payment and closing costs — it is not an extra charge on top of the price. If the sale does not close, what happens depends on why it ended, and on whether you acted before the deadlines that protect you.

How much should you offer?

Colorado sets no minimum or maximum, so the amount is negotiated like price and closing dates. A common range in Colorado is 1% to 3% of the purchase price. On a $600,000 home, that is $6,000 at 1%, $12,000 at 2%, and $18,000 at 3%.

Where you land in that range is strategy. A home drawing several offers in its first weekend is a different conversation from one available for a few weeks. A larger deposit can strengthen an offer because it shows commitment, and since the money is credited back at closing, the real cost is having that cash tied up during the contract — not spending it. Browse homes for sale in Westminster

When it is due, and who holds it

Your contract sets an Earnest Money Deadline in its dates and deadlines table, and that date controls — it is often within the first few days after the contract is fully signed, which both sides call the MEC date. The contract also sets an alternative deadline, so read both lines before assuming you have more time.

Deliver it the way the contract says, in Good Funds — typically a wire transfer or a cashier's check to the holder named in the contract, not a personal check handed to the seller. Get a receipt and confirm the holder received it before the deadline.

When you get it back

This is the part that matters most: in Colorado, your protection is a calendar. The standard contract gives you a series of deadlines, and if you terminate in writing for a reason the contract allows, on or before the matching deadline, your earnest money is generally refundable. Those protected exits include inspection, title, appraisal, loan terms and loan availability, property insurance, and association documents, each with its own date.

Miss the date, and the protection for that issue usually expires — even if the problem itself is real. That is why experienced agents build the first two weeks around the deadline sheet, and why our Colorado home inspection deadlines guide is worth reading alongside this one.

When a seller can keep it

If a buyer defaults — for example, by walking away after the protected deadlines have passed, without a contract reason to terminate — the seller may be entitled to keep the earnest money as liquidated damages. That is the risk the deposit covers: the seller took the home off the market in reliance on your promise to close.

Disputes are handled deliberately. The holder cannot simply hand disputed money to one side; release generally requires written instructions signed by both buyer and seller, or a court order, and the contract points the parties toward mediation first. Most disagreements are avoided by one habit: never let a deadline pass in silence. If you need to act, act in writing, before the date.

Practical tips for buyers and sellers

For buyers: have the cash available before you offer, in an account you can wire from quickly. Ask your agent to walk you through every deadline that affects your deposit the day the contract is signed, and put those dates on your own calendar.

For sellers: look at earnest money as a signal, not just a number. A buyer who offers a meaningful deposit, delivers it on time, and meets each early deadline is showing how the rest of the transaction is likely to go.

For both sides: new-construction contracts are often written on a builder's own form, with different deposit amounts and refund terms. Read those terms before you sign, because the standard-contract rules in this post may not apply the same way.

Bottom line

Earnest money is simple in concept — a good-faith deposit, credited to the buyer at closing — and unforgiving about timing. Offer an amount that fits the home and the competition, deliver it in good funds before the deadline, and protect it by respecting every date that follows.

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The Hudson Stonegate Team helps buyers and sellers across the Denver metro write clear, competitive contracts — and keep the deadlines that protect everyone in them.

Sources: Colorado Real Estate Commission, Contract to Buy and Sell Real Estate (Residential) — earnest money, dates and deadlines, and termination provisions; Baker Law Group, 'Earnest Money in Colorado: What Buyers and Sellers Need to Know,' accessed October 2026 (no state-required amount; common range of 1% to 3% of purchase price; escrow holder and release rules). Dollar examples are illustrations based on a $600,000 purchase price, not market statistics. Every contract varies — your signed contract's amounts, holder, and dates control.