Broker Carol in Massachusetts completes a successful sale. The purchase and sale agreement provides that the $30,000 earnest money deposit held in Carol's trust account shall be credited to the buyer at closing. At the closing table, the closing attorney requests that Carol wire the trust funds directly to the closing attorney's IOLTA account. Carol has not received written authorization from both the buyer and the seller to transfer the funds in this manner. What should Carol do?
Correct Answer
C) Obtain written authorization from both the buyer and the seller before wiring the funds to the closing attorney
Under Massachusetts Board regulations (254 CMR 3.00), disbursements from a trust account must be made in accordance with the terms of the purchase and sale agreement and with proper authorization from the parties entitled to the funds. Wiring funds to a third party's account (even a closing attorney's IOLTA account) in a manner not specified in the purchase and sale agreement requires written authorization from both parties. Carol must obtain this authorization before making the transfer to ensure she is protected and in compliance.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
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