Under NH real estate rules, earnest money received by a broker must be:
Correct Answer
B) Deposited into the broker's escrow (trust) account as specified in the purchase and sale contract
NH Real Estate Commission rules require brokers to deposit earnest money into a separate escrow (trust) account, not commingled with operating funds. The contract specifies the timeline and conditions. Depositing into an operating account constitutes commingling, a license law violation. Funds are not forwarded to the seller or held by the seller's attorney unless the contract specifically provides otherwise.
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Related Topics & Key Terms
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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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