Earnest money deposits in Massachusetts must be:
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Held by seller
The seller cannot hold the earnest money directly as this creates a conflict of interest and potential misuse of funds. Massachusetts law requires a neutral third party to hold these deposits to protect both buyer and seller interests.
Deposited in broker's escrow account or attorney's account
Given to buyer
Giving earnest money directly to the buyer defeats the purpose of the deposit, which is to demonstrate the buyer's commitment to the purchase and provide security to the seller.
No requirements
Massachusetts has specific requirements for earnest money deposits. There are clear regulations mandating that these funds be held in either a broker's escrow account or an attorney's client account.
Why is this correct?
In Massachusetts, earnest money must be deposited in a broker's escrow account or attorney's client account to ensure proper handling and protection of the funds. This neutral third-party safeguard prevents conflicts of interest and ensures compliance with state regulations.
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