In Washington State, when a buyer and seller have a dispute over earnest money held in a real estate firm's trust account, what is the broker's primary obligation?
Correct Answer
D) Retain the earnest money in the trust account until the dispute is resolved
Under RCW 18.85 and WAC 308-124D, when a dispute arises over earnest money, the Washington real estate firm must retain the funds in the trust account until the dispute is resolved — either by written agreement of the parties, a court order, or another legally recognized resolution method. The broker cannot unilaterally release the funds to either party.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
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