A seller’s broker receives and presents a purchase offer that is accepted by the seller. The seller then requests the broker give them the buyer’s deposit check. The broker needs to:
Audio Lesson
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Question & Answer
Review the question and all answer choices
first deposit the check into the broker’s trust account before giving the deposit funds to the seller.
Option A is incorrect because while brokers must deposit checks into a trust account, they don't need to do this before releasing funds to the seller if they have proper consent. The sequence can be direct with proper documentation.
write a counteroffer requesting the release of the deposit funds to the seller.
Option B is incorrect because the broker shouldn't write a counteroffer. The offer has already been accepted, so the broker's role is to facilitate the transaction, not create new terms.
obtain the written consent of the buyer before releasing the check to the seller.
obtain written acknowledgement from the seller they have received the funds.
Option D is incorrect because while obtaining written acknowledgement is good practice, it doesn't address the primary requirement of obtaining the buyer's consent before releasing their funds.
Why is this correct?
Option C is correct because California law requires the broker to obtain written consent from all parties before releasing earnest money deposits. This protects the buyer's interests and ensures proper handling of funds, even after the offer is accepted.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests your understanding of deposit handling in California real estate transactions, which is crucial for protecting both buyers and sellers. The core concept revolves around broker responsibility regarding earnest money deposits. When a broker receives and presents an accepted offer, they become a neutral party holding funds in trust. The correct procedure requires written consent from all parties before releasing these funds. This prevents disputes and ensures proper handling of client funds. The question challenges students by presenting multiple plausible scenarios that could distract from the fundamental requirement of buyer consent. Understanding this concept connects to broader real estate knowledge about agency relationships, trust account management, and the legal obligations brokers have to all parties in a transaction.
Knowledge Background
Essential context and foundational knowledge
In California, real estate brokers must handle earnest money deposits according to specific regulations. These funds are considered trust funds, meaning the broker has a fiduciary duty to manage them properly. California Business and Professions Code Section 10145 requires brokers to deposit these funds into a separate trust account. The broker cannot release these funds without written consent from all parties involved, including the buyer. This rule exists to protect consumers and prevent misuse of client funds by brokers.
W.C.R.D. - Written Consent Required for Deposits
Remember that before releasing any deposit funds, you need Written Consent from all parties before Releasing the Deposits.
When questions involve deposit handling, always look for the requirement of written consent from all parties before funds can be released.
Real World Application
How this concept applies in actual real estate practice
Imagine you're representing a seller who has accepted an offer. The excited seller immediately asks for the buyer's $10,000 deposit check to start planning renovations. As the listing broker, you know you can't simply hand over the check. You must contact the buyer's agent to obtain written consent for releasing the funds. Without this documentation, you could be accused of mishandling the buyer's deposit, potentially leading to disciplinary action and liability.
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