A Nebraska purchase agreement includes an earnest money deposit of $5,000, which is held by the listing broker. After the inspection, the buyer and seller have a dispute over who is entitled to the earnest money. Under Nebraska Real Estate License Act provisions governing trust accounts, what must the broker do?
Correct Answer
D) Retain the earnest money in the trust account until the dispute is resolved by written agreement of both parties or a court order
Under the Nebraska Real Estate License Act (Neb. Rev. Stat. §§ 81-885.01 et seq.) and NREC regulations governing trust accounts, when there is a dispute over earnest money, the broker must retain the funds in the trust account and may not release them to either party without written authorization from both parties or a court order directing disbursement. Unilaterally releasing funds to either party would constitute a violation of trust account rules and could result in disciplinary action.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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