When do you get your earnest money back in Colorado?
You get Colorado earnest money back when you terminate on time under a right the contract gives you. Denver Metro buyers can lose it by missing one deadline, and which one matters depends on your contract.
For example, say you’re under contract on a $600,000 home in Denver’s Platt Park and you wrote a $12,000 earnest money check. Your inspection and appraisal both went fine. Then the lender calls the morning after your New Loan Availability Deadline passed.
Under the state contract, that timing matters more than the reason. The Colorado form says in capital letters that if you don’t get a written Notice to Terminate to the seller in time, your earnest money becomes nonrefundable, with a few exceptions it lists.
This post shows where your $12,000 sits, which deadlines protect it, what happens when the seller won’t sign a release, and when the seller gets to keep it.
The Contract Every Colorado Buyer Signs
Most residential sales in Denver, Aurora, Lakewood, and the rest of the metro use the Colorado Real Estate Commission’s Contract to Buy and Sell Real Estate (Residential), form CBS1. The current version was adopted August 5, 2025, with mandatory use starting January 1, 2026. Section numbers below come from that version. If your contract is older or has additional provisions, read your own copy.
This isn’t legal advice. For a dispute or a question about your rights, talk with a Colorado real estate attorney.
Where Your Earnest Money Goes
Section 4.3 says you tender the earnest money with the contract unless you and the seller agree to an Alternative Earnest Money Deadline. Section 4.3.1 covers that later deadline when you use it.
The money is payable to and held by the Earnest Money Holder named in the contract, in its trust account, on behalf of both you and the seller. The holder can be a brokerage firm or a title company, depending on what the contract names. It sits in trust until the deal closes or ends.
The Rule That Decides Most Refunds
Section 24.1 makes a termination effective when the other party receives your written Notice to Terminate, as long as it arrives by the deadline. The contract also says a Notice to Terminate delivered after the applicable deadline is ineffective and doesn’t terminate the contract.
Section 24.2 then says that when the contract is terminated, all earnest money received must be timely returned to the buyer, subject to sections 10.4 and 21.
Section 4.3.2 says the same thing: if you have a right to terminate and timely terminate, you’re entitled to the return of the earnest money.
The Deadlines That Protect Your Money
Each right below has its own deadline in the section 3 deadline table. Your dates are whatever you and the seller wrote in.
| Right to terminate | Contract section | Deadline that controls |
|---|---|---|
| Inspection, in your sole subjective discretion | 10.3.1 | Inspection Termination Deadline |
| Inspection objection not resolved | 10.3.3 | Inspection Resolution Deadline |
| Loan availability | 5.2.2 | New Loan Availability Deadline |
| Low appraisal | 6.2.1 | Appraisal Objection Deadline |
| Association documents | 7.4 | Association Documents Termination Deadline |
| Title matters | 8.7 | Title objection and resolution deadlines |
A few details from these sections catch Denver Metro buyers off guard:
- Inspection. Section 10.3.1 lets you terminate by the Inspection Termination Deadline. Once you deliver an Inspection Objection instead, that termination option ends. If you and the seller don’t agree in writing by the Inspection Resolution Deadline, section 10.3.3 says the contract terminates unless the seller receives your written withdrawal of the objection. For what to do when a seller won’t fix anything, see what happens when a Colorado seller refuses your inspection objection.
- Loan. Section 5.2.2 is where the nonrefundable language lives. It also limits the loan right: you can’t use it to terminate over loan terms, the appraisal, lender property requirements, insurability, or a conditional sale. Those have their own sections and deadlines.
- Appraisal. Under section 6.2.1, if the appraised value is less than the purchase price, you can terminate or object by the Appraisal Objection Deadline. The full low appraisal playbook is in what to do with a low appraisal on a Colorado contract.
- HOA documents. Section 7.4 gives you a right to terminate by the Association Documents Termination Deadline, in your sole subjective discretion. Miss it and you’ve accepted the documents.
When the Seller Won’t Sign the Release
Here’s a moment buyers don’t expect. You terminated on time, and the money still doesn’t come back right away.
The holder releases earnest money on written mutual instructions, often an Earnest Money Release form. Section 4.3.2 gives the seller three days from receiving that form to sign and return it. Under section 4.3.2.1, a seller who doesn’t do that is in default and liable to you under sections 20.2 and 21, unless the seller is entitled to the money because of a buyer default. The same three-day duty runs the other way under section 4.3.2.2 when the seller is the one entitled to the money.
If there’s a real dispute, section 23 says the holder isn’t required to release the money. The holder can wait for a court proceeding, file an interpleader with the court, or notify both parties that it may return the money to you if no lawsuit case number reaches it within 120 days of that notice. Section 22 also calls for mediation of the dispute.
The Commission’s own position on releases, CP-6, says it won’t discipline a brokerage firm for refusing to disburse disputed funds while following the contract. CP-6 also says releases aren’t required by the Commission, and that when one party gives written authorization to release funds to the other, the other party’s written release isn’t needed.
Section 21 adds weight to all of this. In arbitration or litigation over the contract, the prevailing party gets reasonable costs and expenses, including attorney fees.
When the Seller Keeps It
Buyer default is the other side. Section 20.1 gives the seller two possible remedies, and the box checked in your contract decides which one applies.
Section 20.1.2, Liquidated Damages, applies unless the box in section 20.1.1 is checked. Under it, the seller may cancel the contract, all earnest money goes to the seller, and the earnest money amount in section 4.1 is the seller’s only remedy, except as provided in sections 10.4 and 21. The seller waives specific performance and additional damages.
If the section 20.1.1 Specific Performance box is checked, the seller has more options. The seller can cancel and keep the earnest money, or keep the contract in force and seek specific performance or damages.
In our $600,000 Platt Park example with liquidated damages, a buyer who walks without a valid termination right loses the $12,000, plus any costs a court or arbitrator awards under section 21. With the specific performance box checked, the exposure can be larger. Check that box before you sign.
Working Through It With a Local Agent
Jamie Bridges, a REALTOR® with Keller Williams Realty DTC, holds the Accredited Buyer’s Representative (ABR) designation and works with buyers across the Denver Metro Area, from Denver and Aurora to Littleton, Centennial, and Lakewood. Once you’re under contract, he builds a calendar of every termination deadline in your section 3 table and checks which remedy box sits in section 20. Then you know the exact date your earnest money stops being refundable before you get there.
Frequently Asked Questions
Is earnest money refundable in Colorado? It’s refundable when you terminate on time under a right in the contract, such as inspection, loan availability, appraisal, title, or association documents. Section 24.2 of the Commission’s CBS1 form says earnest money must be timely returned to you after a termination.
Who holds earnest money on a Denver home purchase? The Earnest Money Holder named in section 4.3 of your contract holds it in a trust account on behalf of both parties. That can be a brokerage firm or a title company. It doesn’t go to the seller until closing or a release.
How long does a Colorado earnest money release take? Section 4.3.2 gives the party who must sign the release three days from receiving it. In a real dispute, section 23 lets the holder keep the funds until the parties agree, a court acts, or 120 days pass after the holder’s notice with no lawsuit filed.
Put your termination dates on a calendar the day you go under contract. Jamie Bridges is a REALTOR® with Keller Williams Realty DTC serving the Denver Metro Area and Summit County, Colorado. Call or text Jamie at 720-397-7555 to talk about your next move.
Sources: Colorado Real Estate Commission, Contract to Buy and Sell Real Estate (Residential), CBS1, adopted August 5, 2025, mandatory use January 1, 2026, sections 3, 4.3, 5.2.2, 6.2.1, 7.4, 8.7, 10.3, 20, 21, 22, 23, and 24, accessed November 6, 2026; Colorado Division of Real Estate, Real Estate Broker Contracts and Forms, accessed November 6, 2026; Colorado Real Estate Commission, Commission Position CP-6, Release of Earnest Money Deposits, recodified June 7, 2022, accessed November 6, 2026. Data deemed reliable but not guaranteed. General information only. This isn’t legal advice. Talk with a Colorado real estate attorney about your situation. Dollar figures are examples only.
