Broker Lee receives a personal check for earnest money that bounces when deposited. The seller demands that Lee make good on the check from her own funds until the buyer provides a replacement. How should Lee respond?
Correct Answer
B) Notify all parties that no valid earnest money was received
When an earnest money check bounces, no valid deposit was actually received. The broker must notify all parties of this fact and cannot use personal funds to cover client obligations. Option A creates improper commingling. Option C doesn't address the notification requirement. Option D exceeds the broker's authority as only parties can cancel contracts.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.
The National Do Not Call Registry is a federal program administered by the FTC that allows consumers to opt out of receiving unsolicited telemarketing calls, including calls from real estate agents soliciting business.
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