A Washington purchase and sale agreement includes a clause stating that the buyer's earnest money of $30,000 will be held by the buyer's broker's firm rather than the listing firm. The listing firm's designated broker objects, claiming that the listing firm must hold all earnest money. The buyer's broker's designated broker argues that holding the earnest money in the buyer's broker's trust account is permissible. Which of the following best reflects Washington law on this issue?
Correct Answer
D) The buyer's broker's firm may hold the earnest money in its trust account if the parties agree to this arrangement in the purchase and sale agreement
Under RCW 18.85 and WAC 308-124D, Washington law does not require that the listing firm hold earnest money in all transactions. Any Washington-licensed real estate firm with a properly maintained trust account may hold earnest money, provided the parties agree to this arrangement. It is permissible for the buyer's broker's firm to hold the earnest money in its trust account when the purchase and sale agreement specifies this arrangement. The key requirement is that the funds are held in a properly designated trust account by a licensed firm.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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