Employing Broker Lisa in Fort Collins receives a $15,000 earnest money deposit for a residential transaction. The seller and buyer have a dispute and the transaction falls through. Both parties claim the earnest money. Lisa is uncertain who is entitled to the funds. Under Colorado law, what is Lisa's most appropriate course of action?
Correct Answer
C) Retain the funds in the trust account and seek a written release from both parties or interplead the funds with a court
Under CREC rules and C.R.S. § 12-10-217, when there is a dispute over earnest money, the broker must retain the funds in the trust account and may not release them without a written agreement signed by all parties, a court order, or by filing an interpleader action with the court. This protects the broker from liability and ensures proper legal resolution of the dispute.
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Related Topics & Key Terms
Key Terms:
Related Concepts
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
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