In California, earnest money is most commonly held by an escrow company or title company, and sometimes by the buyer’s real estate broker in a trust account if the purchase agreement allows it. A real estate agent personally should not keep earnest money in a personal account. The key rule is that the funds must be handled by a properly authorized party and deposited into the correct trust or escrow account. Start your journey with LEAP's California real estate pre-licensing course.

In practice, California buyers usually write the deposit check to the escrow holder named in the contract. If a broker receives the money first, state trust-fund rules apply, including strict handling and timely deposit requirements. That is one reason escrow is so common: it gives both sides a neutral place to hold the funds while the sale moves forward.

What affects where the money goes is mainly the purchase agreement and the parties’ instructions. Timing matters too, because deposits are typically due soon after acceptance of the offer, and different escrow companies may have different fees, so the cost can vary. Buyers exploring a California real estate license should understand these trust-account rules, since mishandling earnest money can create serious compliance problems.

If you’re learning the California process and want to see how earnest money fits into the broader transaction, a solid next step is reviewing California real estate pre-licensing course. It can help you understand escrow, trust funds, and other core topics before you start working with clients.