When there is a dispute over earnest money and the broker cannot determine the rightful party, what is the most appropriate action for the broker to take?
Correct Answer
B) Interplead the funds with a court and let the court determine the rightful party
When a broker holds earnest money in escrow and a dispute arises between the buyer and seller, the broker should not unilaterally decide who receives the funds. The appropriate action is to interplead the funds — depositing them with a court and asking the court to determine the rightful party. This protects the broker from liability and ensures a neutral resolution. Maine real estate licensees are required to maintain escrow funds in a separate trust account and handle disputes in accordance with Maine license law.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
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