Earnest money is a deposit paid—often into an escrow account—to show a good-faith intention to complete a transaction—often a transaction for the purchase of real property (real estate).

If the prospective buyer defaults and fails to complete the transaction for the purchase of the real property (fails to close) the earnest money is usually forfeited and delivered to the would-be seller under the terms of the contract or agreement for the sale of the property.

Earnest money is generally not required for a valid contract for the purchase and sale of real property, but is often included to compensate the prospective seller for time and potential missed sales opportunities while the sale was “under contract” with the prospective buyer.

Earnest money may also be referred to as earnest; bargain money; caution money; hand money; or down payment.

In Kansas, earnest money is a common practice in real estate transactions, serving as a deposit to demonstrate the buyer's good-faith intention to purchase the property. While not legally required for a contract to be valid, it is customary and provides the seller with a form of security. If the buyer defaults and does not complete the purchase, the earnest money is typically forfeited according to the terms set forth in the purchase agreement, compensating the seller for the time the property was off the market. The handling of earnest money in Kansas is often managed through an escrow account, and the specific rules governing the forfeiture or return of these funds can be detailed in the purchase contract. It is important for both buyers and sellers to clearly understand the terms related to earnest money in their contract, and they may wish to consult with an attorney to ensure their rights and interests are adequately protected.