Trust Funds
A buyer's earnest money is being held by the listing broker. The transaction falls through and there is a dispute about who is entitled to the funds. What should the broker do?
AGive the money to the seller as compensation for the failed deal
BReturn the money to the buyer immediately without seller consent
CContinue to hold the funds in trust until both parties agree on the disbursement, or interplead the funds with the court✓ Correct
DGive the money to their real estate attorney for safekeeping
Explanation
When there is a dispute about trust funds, the broker must NOT unilaterally disburse the funds to either party. The broker should continue holding the funds pending a mutual written agreement, or may file an interpleader action with the court, depositing the funds with the court to resolve the dispute.
Related California Trust Funds Questions
- What is 'commingling' of trust funds?
- A broker may maintain a personal (broker's) funds balance in the trust account of up to how much to cover bank service charges?
- Commingling in real estate refers to:
- What is 'conversion' in the context of trust funds?
- A broker who is also a property manager collects rent on behalf of an owner. These rental proceeds are:
- Interest earned on funds held in a broker's trust account generally belongs to:
- Conversion of trust funds occurs when a broker:
- A broker who holds a disputed earnest money deposit and cannot get agreement from the parties may:
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