A purchase agreement between buyer Karen and seller Paul falls through because Paul refuses to complete necessary repairs. Karen demands the return of her $6,500 earnest money deposit, but Paul insists the money should be forfeited to him. Broker Lisa holds the earnest money in her trust account. Under Minnesota law, what is Broker Lisa's most appropriate course of action when the parties dispute the disbursement of earnest money?
Correct Answer
D) Continue to hold the earnest money in trust until both parties provide written agreement on disbursement or a court orders disbursement
Under Minn. Stat. Ch. 82 and MN DOC guidance, when there is a dispute over the disbursement of earnest money, the broker must continue to hold the funds in the trust account until the dispute is resolved. Resolution may come through a written agreement between both parties authorizing disbursement, a court order directing disbursement, or another legally recognized resolution mechanism. The broker should not unilaterally decide in favor of either party.
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Related Topics & Key Terms
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Related Concepts
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
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