Broker Chen represents seller Williams in the sale of a Seattle condo. During the transaction, Chen receives the earnest money deposit from the buyer. Williams asks Chen to hold the money in Chen's personal checking account until closing to earn a small amount of interest. Under Washington law, how must Chen handle this request?
Correct Answer
A) Chen must decline and deposit the earnest money into a properly maintained trust account as required by Washington law.
Under RCW 18.85.285 and the accounting duty in RCW 18.86.040(1)(e), a broker must deposit client funds into a properly maintained trust account and may not commingle client funds with personal or business funds. Holding earnest money in a personal checking account violates Washington's trust account rules regardless of the seller's instructions or the intent to earn interest. This is a non-waivable legal requirement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
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