A buyer's $15,000 earnest money deposit is held in a broker's trust account for six months before closing. The purchase contract is silent on whether the deposit should earn interest. Under New York law, who is entitled to any interest that accrued on the funds during this period?
Correct Answer
B) The buyer, because the deposit originated from the buyer's funds
Under New York law, when a purchase contract is silent on the disposition of interest earned on an earnest money deposit, the interest follows the principal. Because the deposit belongs to the buyer until closing — the broker holds it in trust, not as the broker's own funds — any interest accrued on those funds belongs to the buyer. The broker has no legal entitlement to interest earned on client funds held in trust.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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- → Under New York Department of State fee schedules, what is the fee required to sit for the real estate salesperson licensing examination?
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