Kentucky · Earnest moneyKentucky earnest money: when it goes into escrow and how a broker releases it after a failed deal

A Kentucky principal broker must keep one or more escrow accounts, separate from the individual or office account, maintained within Kentucky and identified to the Real Estate Commission in writing, and must deposit all contract deposits and money belonging to others in them without unreasonable delay. The broker may place a deposit in an interest-bearing account, with the interest going to whoever all parties agree in writing; no checks may be drawn against uncollected deposits, and an overdraft not corrected within 72 hours of notice must be reported to the commission. No contract deposit may be withdrawn until the contract ends by performance, by written agreement of all parties or by court order – with one exception. When the broker is told that one or more parties don't intend to perform, it may start the release process: it notifies all parties by certified mail, at their last known address, that the deposit will go to the parties named in the letter unless all parties sign a written mutual release or one of them files suit within sixty days of the mailing date. If neither happens in those sixty days, the broker may release the deposit to the party named in the letter without penalty under the statute and without civil liability in Kentucky courts (KRS 324.111).