DRE & LicensingIntermediateCalifornia Exam
What must a DRE licensee do when they receive a dispute over earnest money between a buyer and seller?
AReturn funds to whoever demands them first, per standard DRE licensing procedure
BRetain funds in trust until the dispute is resolved or interplead funds with the courtCorrect
CForward funds to the listing broker for safekeeping, as required for license renewal in California
DDistribute funds equally between buyer and seller, consistent with Business and Professions Code licensing rules
Why Retain funds in trust until the dispute is resolved or interplead funds with the court Is Correct
Answer B: Retain funds in trust until the dispute is resolved or interplead funds with the court
When a dispute arises over earnest money deposits, the broker must keep the funds in trust and may not release them without mutual written consent from both parties, a court order, or by filing an interpleader action with the court.
Key DRE & Licensing Terms in This Question
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Seller's Agent (Listing Agent)A real estate licensee who represents the seller's interests, markets the property, and owes fiduciary duties to the seller.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Math Concepts
State-Specific Concepts
Escrow DisputesDRE Regulation
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