Broker Anderson holds $10,000 in earnest money for a transaction that fails to close. The buyer and seller cannot agree on how to split the funds. The buyer demands the full amount while the seller claims $3,000 for damages. What should Anderson do?
Correct Answer
C) Continue holding the funds until receiving proper authorization for disbursement
When parties dispute escrow funds, the broker must continue holding the funds until receiving proper legal authorization (written agreement from all parties, mediation/arbitration award, or court order). Option A ignores the seller's potential claim. Option B arbitrarily divides funds without authority. Option D makes an unauthorized decision about the dispute.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
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