Michigan salesperson James receives a $10,000 earnest money check from buyer client Alicia after she signs a purchase agreement for a Flint property. James's broker, Broker Chen, has a separate trust account established for client funds. What must James do with the earnest money check under Michigan law?
Correct Answer
C) Deliver the earnest money to Broker Chen promptly so it can be deposited into the broker's trust account
Under Michigan law (MCL 339.2512), a salesperson who receives earnest money must promptly deliver it to their employing broker, who is then responsible for depositing it into a separate trust (escrow) account. The broker — not the salesperson — holds legal responsibility for trust fund management. James must not hold, deposit, or disburse the funds himself.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
An agency relationship created by the conduct or actions of the parties rather than by a written or oral agreement.
The legal obligation to reveal information that could affect a party's decision to enter into or the terms of a real estate transaction.
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