A buyer submits an offer on a Lansing home and includes a $5,000 earnest money check made payable to the listing broker's company. The seller accepts the offer on Tuesday afternoon. Under Michigan law and the Michigan Occupational Code, who is responsible for depositing the earnest money, and by when must it be deposited?
Correct Answer
B) The listing broker must deposit the funds into a separate trust account within a reasonable time after acceptance
Under the Michigan Occupational Code (MCL 339.2512), the broker who receives earnest money is responsible for depositing it into a separate trust (escrow) account. Since the earnest money check is made payable to the listing broker's company, the listing broker bears responsibility for proper deposit. Michigan law requires that trust funds be kept in a separate account, distinct from the broker's operating funds, and deposited within a reasonable time after receipt. Commingling trust funds with operating funds is a disciplinary violation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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