An earnest money dispute arises between a buyer and seller on a failed Illinois transaction. Both parties claim entitlement to the funds held in the broker's escrow account. What is the broker's proper course of action under Illinois law?
Correct Answer
B) Retain the funds in escrow and disburse only upon receipt of written mutual instructions from both parties or another lawful authorization, such as a court order.
Under the Illinois Real Estate License Act of 2000 (225 ILCS 454), a broker holding disputed earnest money in escrow may not unilaterally decide who is entitled to the funds. The broker must retain the deposit in the escrow account and disburse it only upon a lawful triggering event — most commonly written agreement signed by both parties directing the release, or a court order. Unauthorized disbursement exposes the broker to disciplinary action by IDFPR, civil liability, and potential license suspension or revocation.
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