Broker Sandra in Detroit is holding $15,000 in earnest money for a pending residential sale. The buyer and seller have a dispute and both parties are now demanding the earnest money. Sandra is uncertain who is entitled to the funds. What is the most appropriate course of action for Sandra under Michigan law?
Correct Answer
C) Continue holding the funds in the trust account and seek legal guidance or interpleader action
Under Michigan law and consistent with MCL 339.2512, when there is a dispute over earnest money, the broker must continue to hold the funds in the trust account and may not release them unilaterally to either party. The broker should seek legal guidance or file an interpleader action with the court, which allows a neutral party (the court) to determine the proper distribution of disputed funds. This protects the broker from liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
Market allocation is an illegal antitrust practice in which competing real estate brokerages agree to divide markets among themselves by geographic area, property type, or price range, thereby eliminating competition.
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