Which statement best differentiates earnest money from security deposits in Florida real estate transactions?

• A. Earnest money shows serious intent and is held in escrow; security deposits are paid by tenants to cover potential damages and are held by the landlord.
• B. Earnest money is paid by the seller; security deposits are paid by tenants.
• C. Earnest money is optional; security deposits are required by law.
• D. Earnest money and security deposits are the same thing in Florida.

Answer: (A)

Earnest money and security deposits serve different roles in Florida real estate. Earnest money is money a buyer provides to show serious intent to buy under a purchase contract; it’s placed in escrow and sits there until closing, where it typically becomes part of the purchase price or is released if the contract terminates under approved terms. Security deposits are paid by tenants to landlords to secure the tenancy and cover potential damages; they’re held by the landlord (often in a separate account or custodial arrangement) and are governed by landlord-tenant rules about handling, interest, and refunds. Because of their distinct purposes, who pays, who holds the funds, and how they’re used differ, making the described distinction the accurate one. The other statements mix up who pays, whether the payments are required, or claim they’re the same thing, which doesn’t fit the actual practice in Florida real estate.