Broker Linda received a $9,600 earnest money deposit from a buyer on Monday afternoon. Under Michigan law, what is Linda's obligation regarding this earnest money?
Correct Answer
D) Linda must deposit the funds into a separate trust account by the end of the next banking day after receipt
Under MCL 339.2512 and the administrative rules promulgated under the Michigan Occupational Code, a broker must deposit earnest money and other trust funds into a separate, designated trust (escrow) account by the end of the next banking day following receipt. This protects client funds and prevents commingling with the broker's operating funds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
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