When Is Your Earnest Money Actually at Risk in Colorado?
Your earnest money is protected by an unexpired right to terminate, or by the seller being in default. Colorado's contract names the moment it turns, once, in capitals, at the loan deadline. One checkbox decides whether the deposit is the ceiling, with narrow exceptions, or only the first item.
Earnest money is not simply refundable or gone. The contract settles when it stops being refundable, and separately how much you are exposed once it does. The second answer is not always the deposit.
The short answer: Your earnest money is protected while an unexpired Right to Terminate still covers you, or while the seller is the one in default. Terminate in writing, on time, and the contract says the money must be returned to you, once both sides sign the release. The form uses the word NONREFUNDABLE exactly once, at the New Loan Availability Deadline, and it carves out Appraisal, Title and Survey by name. How much is at risk after that is decided by a single checkbox: unchecked, the deposit is the seller's only remedy, with narrow exceptions; checked, the seller may instead pursue specific performance or additional damages.
The contract names the moment, once, in capital letters
In the whole contract the word "nonrefundable" appears exactly once, in the New Loan Availability provision, in capitals:
"IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER'S WRITTEN NOTICE TO TERMINATE, BUYER'S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g., Appraisal, Title, Survey)."
The exception clause matters as much as the capitals. Until then, what protects the deposit is an unexpired Right to Terminate, which takes effect only when the other side receives your written Notice to Terminate, on or before the date. An email saying you want out is not that instrument.
Read the sentence before the capitals, too. The buyer "does not have a Right to Terminate based on the New Loan Availability if the termination is based on the New Loan Terms, Appraised Value, the Lender Property Requirements, Insurability or the Conditional Upon Sale of Property." That deadline covers whether the loan is available, not whether it works. Two of the five are governed somewhere else entirely: a lender demanding repairs the seller has not already agreed to is a Lender Property Requirement, which has no row in your table at all and terminates the contract on its own three days after the seller receives it; a move-up buyer whose own sale collapses is on Conditional Upon Sale of Property, its own row, live only if someone dated it.
| Where you are | What protects the deposit | What the form says |
|---|---|---|
| A Right to Terminate is unexpired (inspection, insurance, association documents, title) | The right itself, if that row is dated; the inspection one ends when you deliver an Inspection Objection | The money "must be timely returned to Buyer" |
| The New Loan Availability Deadline passes, no notice | Nothing on that ground; other rights, Appraisal and Title and Survey among them, can still apply | "BUYER'S EARNEST MONEY WILL BE NONREFUNDABLE" |
| Closing, you cannot perform, no out applies | Nothing | Default; the remedy is the branch your contract elected |
A row left blank or marked "N/A" deletes the provision beneath it; the full schedule is in our Colorado contract deadlines guide.
One checkbox decides how much is at risk
In the remedies section, the provision headed Specific Performance has a small empty box beside it. It decides which of two worlds you are in if you default, and the form says the liquidated-damages branch applies unless the box is checked.
Left unmarked, the earnest money is designated as liquidated damages rather than a penalty, the contract calls it the seller's only remedy for the buyer's failure to perform, and the seller "expressly waives the remedies of specific performance and additional damages." The ceiling is the deposit.
Marked, the ceiling comes off. The seller may cancel, keep the earnest money, and "recover such additional damages as may be proper," or treat the contract as in force and seek specific performance, a court order to complete the purchase.
The box does not arrive pre-marked: on a buyer's offer the form is filled in by the buyer's own broker, and where the election turns live is a seller's counter, which is negotiable like any other term.
Two caveats, and the first is where the ceiling breaks. "Only remedy" is not quite total: the same sentence excepts the buyer's liability for inspection damage and liens, and the legal-fees section, which says the arbitrator or court "must award to the prevailing party all reasonable costs and expenses, including attorney fees." Those sit outside the deposit. The sides are not symmetrical: the seller's specific-performance remedy exists only if that box is marked; the buyer's carries no box.
Neither pole is where the form itself points, either: the contract's own route for moving the deposit is written mutual instructions signed by both sides, so a negotiated release is its middle. Both branches reach the agreed amount "whether or not paid by Buyer." Which branch applies is a term, settled when the contract is written rather than when something goes wrong. Ask your broker to show you that box.
Being entitled to it is not the same as having it back
The money comes back through written mutual instructions, commonly the Commission's Earnest Money Release form, and the other party's three days run from its receipt of that form. Nothing starts until you send it. Refusing is not free: a party who fails to sign is in default.
Who holds it then decides which rule you are under. Where a title company or an attorney holds it, the contract's Earnest Money Dispute section governs, and it is unhurried: on any controversy the holder is not required to release the funds, and its exits run through a court filing or a long notice period. The Commission's position statement says a brokerage firm is not responsible for the disposition where a third party holds it.
Where a brokerage firm holds it instead, that statement adds something the contract does not: audits found firms sitting on funds because one party would not sign, releases are not required by the Commission, and one party's written authorization is enough to release to the other.
If your contract is already signed, the dates in your table govern, and moving one takes a separate Commission-approved amend/extend form and the seller's signature, not a phone call. So the two questions worth asking today are your lender's, where the loan actually stands against the New Loan Availability Deadline, and your broker's, which of your termination rows are still open and which have expired.
If you have not written the offer yet, buying a home in Boulder County sets the order these decisions come in. One box and one deadline decide the rest: before you sign, find the Specific Performance provision and see whether its box is marked; after you sign, put the New Loan Availability Deadline in your calendar in ink. For buyers we represent under a written buyer-agency agreement, both get read while the offer is being written, not explained afterwards. That is where we begin.
True North Boulder is a real-estate team with eXp Realty. This is what the contract and the Commission's materials say, not legal advice; your contract's terms govern, and a Colorado real-estate attorney should confirm how they apply.
Sources & notes
- Every contract mechanic on this page is read from the promulgated form itself: Colorado Real Estate Commission, Contract to Buy and Sell Real Estate (Residential), form CBS1, adoption date August 5, 2025, mandatory use date January 1, 2026; retrieved and read in full 2026-08-16. The remedies election and the liquidated-damages branch are § 20.1.1. and § 20.1.2.; the seller-default remedies are § 20.2.1.; the New Loan Availability pivot, its exclusion list and the single “NONREFUNDABLE” sentence are § 5.2.2.; legal fees are § 21.; the release duty and its three-day clock are § 4.3.2.; the dispute options are § 23.; termination on receipt of a Notice to Terminate is § 24.1. and the return of Earnest Money is § 24.2.; the rule that a blank or “N/A” deadline deletes its provision is § 3.2.; the inspection right that expires on delivery of an Inspection Objection is § 10.3.1.
- On a holder’s duty to release: Commission Position 6 — Release of Earnest Money Deposits (recodification adoption June 7, 2022), listed on the Division’s current Real Estate Manual and position statements page, retrieved 2026-08-16. CP-6 addresses a Brokerage Firm holding the deposit and states that where a third party such as a title company or attorney holds it, the Brokerage Firm is not responsible for its disposition — which is why this page splits the two cases.
- We name the provisions in words as well as by number. The section numbering above is current for the form adopted August 5, 2025; the row numbers in the Dates and Deadlines table are re-issued with each revision. Confirm the version and the exact rows against your own contract with your broker.
- No market figure appears on this page, deliberately. The deposit percentages commonly quoted online carry no stated basis, window or primary source, so we do not repeat them. The form’s own treatment is primary and is what we report: the amount is a blank the parties fill in.
Frequently asked
When does earnest money become non-refundable in Colorado?+
The standard state contract uses the word NONREFUNDABLE exactly once, in the New Loan Availability section. It says that if the seller is not in default and does not timely receive the buyer's written Notice to Terminate, the buyer's earnest money will be nonrefundable, except as otherwise provided in the contract, offering Appraisal, Title and Survey as its examples rather than a closed list. Before that point your protection is whichever Rights to Terminate are still unexpired and still written into your Dates and Deadlines table. No fixed calendar date applies to every purchase, because every deadline in that table is negotiated into your specific contract.
Can a Colorado seller sue for more than the earnest money?+
It depends on one checkbox in the contract's remedies section. If the Specific Performance box is not checked, the Liquidated Damages provision applies: the earnest money is designated as liquidated damages and the contract states it is the seller's only remedy for the buyer's failure to perform, with narrow exceptions the same sentence names, and the seller expressly waives specific performance and additional damages. If the box is checked, the seller may instead cancel and keep the earnest money and recover such additional damages as may be proper, or treat the contract as in full force and seek specific performance. Which one applies is a term of your contract, settled when it is written, so ask your broker to show you that box, and a Colorado real-estate attorney if the answer matters to you.
If I terminate on time, do I automatically get my earnest money back?+
Under the contract you are entitled to it, which is not the same as holding it. The contract says that on termination all earnest money received must be timely returned to the buyer, and the disposition section gives the other party three days from its receipt of the written mutual instructions, commonly the Earnest Money Release form, to execute and return them, so the clock does not begin until that form goes out. Failing to sign it is itself a default under the contract. But the Earnest Money Dispute section also says that if there is any controversy, the holder is not required to release the funds and may wait for a proceeding, interplead the money into court, or give notice that it will return the funds to the buyer unless it receives a copy of a lawsuit within one hundred twenty days.
How much earnest money do I have to put down in Colorado?+
The amount is a blank on the standard form that the parties fill in, not a figure the form sets. It is normally tendered with the contract unless both sides agree to an Alternative Earnest Money Deadline for delivering it. One detail worth knowing: both remedy provisions say all earnest money will be paid to the seller whether or not it was actually paid by the buyer, so the obligation attaches to the agreed amount rather than only to funds already sitting in an escrow account.
