Earnest money deposits in New Jersey must be held:
Question & Answer
Review the question and all answer choices
By the seller
The seller cannot directly hold earnest money deposits as this creates a conflict of interest. The seller has a financial incentive in the transaction and might improperly use or refuse to return the funds.
In the broker's trust account or attorney escrow
By the buyer
Buyers cannot hold their own earnest money deposits as this defeats the purpose of demonstrating good faith and removes the security element that protects the seller.
No requirements exist
New Jersey has specific requirements for earnest money handling, including mandatory holding in broker trust accounts or attorney escrow accounts.
Why is this correct?
New Jersey law requires earnest money to be held in either the broker's trust account or attorney escrow account. This ensures proper handling, prevents commingling of funds, and protects both buyer and seller interests until closing or contract termination.
Continue Learning
Explore this topic in different formats
More Contracts Videos
Continue learning with related video lessons
Ready to Ace Your Real Estate Exam?
Access 2,000+ free video lessons covering all 11 exam topics.