A buyer in Maryland signs a purchase agreement and provides a $5,000 earnest money deposit. The deposit is held by the listing brokerage. Under Maryland law, where must the earnest money deposit be held?
Correct Answer
B) In an escrow or trust account maintained by the broker in a federally insured institution
Under the Maryland Real Estate Brokers Act, Md. Code Ann., Bus. Occ. & Prof. § 17-502, brokers who hold client funds — including earnest money deposits — must maintain those funds in a separate escrow or trust account at a federally insured financial institution. The funds must be kept separate from the broker's operating accounts and personal funds. This requirement protects clients and is a fundamental obligation for Maryland licensees.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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