A sponsoring broker disburses earnest money from the escrow account before the transaction has been consummated or terminated, relying solely on a verbal request from the buyer. How does Illinois law treat this disbursement?
Correct Answer
C) The disbursement is improper because Illinois law requires escrow funds to remain on deposit until the transaction is consummated or terminated, and disbursement requires written authorization or another recognized statutory exception.
The Illinois License Act of 2000 requires that escrow funds remain on deposit until the transaction is either consummated or terminated. Early disbursement is only lawful when a specific authorized exception applies — such as a written agreement signed by all parties, a court order, or another mechanism recognized by the Act. A unilateral verbal request from one party satisfies none of these exceptions, making the disbursement a violation of the Act's escrow-protection requirements.
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