When is the broker entitled to earnest money as part of their commission?

In Montana real estate practice, the broker is entitled to earnest money when the transaction is terminated. Earnest money serves as a deposit made by the buyer to demonstrate their commitment to the purchase. If the deal does not proceed to completion—whether due to the buyer backing out, failure to meet contingencies, or other reasons—the broker may be entitled to retain that earnest money as compensation for the time and resources invested in facilitating the transaction.

This timing is crucial because it reflects the broker's role as an intermediary and the fact that their efforts were expended even if the full transaction did not come to fruition. Under certain circumstances, the terms agreed upon in the purchase agreement regarding the treatment of earnest money will guide what happens to those funds. When the sale does not conclude successfully, the broker's claim to the earnest money emerges as a potential source of income for their services provided up to that point.

While the other options reflect common stages in the transaction process, they do not accurately represent when a broker earns the right to the earnest money. For instance, being entitled to it at the beginning would preemptively award the broker without regard to the outcome of the deal. Claiming it after the agreement is signed suggests that the broker has rights to the