Under Maryland law and MREC regulations, all of the following statements about earnest money deposit handling are correct EXCEPT:
Correct Answer
D) A broker may release disputed earnest money to the seller unilaterally if the seller is the broker's principal under the listing agreement
Option B is the INCORRECT statement. Under Maryland law and MREC regulations, a broker may NOT unilaterally release disputed earnest money to the seller — or to any party — simply because the seller is the broker's listing principal. When a deposit is disputed, the broker must retain the funds in the trust account and resolve the dispute through mutual agreement of the parties, MREC guidance, or a court interpleader action. Releasing funds unilaterally exposes the broker to disciplinary action and potential civil liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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