Kevin is a licensed Virginia salesperson whose client, the buyer, defaulted on a purchase contract. The seller is demanding the $8,000 earnest money deposit held in Kevin's broker's escrow account. The buyer insists the deposit should be returned. Both parties have submitted written competing demands. Under Virginia law and VREB regulations, what must Kevin's broker do?
Correct Answer
D) Retain the funds in escrow and follow the dispute resolution procedures under Virginia law, which may include notifying VREB or seeking a court interpleader.
Under 18 VAC 135-20-180, when a broker holds disputed escrow funds and receives competing written demands, the broker must not unilaterally release the funds to either party. The broker must retain the funds in the escrow account and follow Virginia's prescribed dispute resolution process, which includes options such as filing an interpleader action in court, seeking VREB guidance, or following a written agreement between the parties. Unilateral release to either side without authorization exposes the broker to disciplinary action.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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