A Maryland buyer and seller have a contract dispute, and both parties are claiming the $8,000 earnest money currently held in Broker Kevin's trust account. Kevin is unsure who is legally entitled to the funds. Under Maryland law, what is Kevin's best course of action?
Correct Answer
D) Retain the funds in the trust account until the parties resolve the dispute or a court orders disbursement
Under Maryland license law and COMAR 09.11.03, when there is a good-faith dispute over the disbursement of trust funds, the broker must retain the funds in the trust account until the parties reach a written agreement, a court of competent jurisdiction orders disbursement, or another legal resolution is reached. Unilaterally releasing disputed funds to either party exposes the broker to liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
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