Tom, a licensed Michigan salesperson, receives a $5,000 earnest money check from a buyer after a purchase agreement is signed. Under Michigan law, what is the proper procedure for handling this earnest money?
Correct Answer
D) Tom must promptly deliver the earnest money to his employing broker for deposit into a separate trust account
Under Michigan Occupational Code (MCL 339.2512), a salesperson must promptly deliver all trust funds, including earnest money, to the employing broker. The broker is legally responsible for depositing the funds into a separate, designated trust (escrow) account. A salesperson cannot independently hold or deposit trust funds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
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