Under Michigan law, earnest money deposits must be:
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Held by the seller directly
Holding earnest money directly by the seller is prohibited in Michigan as it creates commingling risks and lacks the protections of a regulated trust account.
Deposited in a trust account within 2 banking days
Given to the buyer's attorney
Giving earnest money to the buyer's attorney is not the standard procedure in Michigan, as the listing broker typically handles these funds through their trust account.
Not regulated
Earnest money deposits are regulated in Michigan, requiring specific handling procedures to protect consumers and ensure proper fund management.
Why is this correct?
Under Michigan law, real estate brokers must deposit earnest money into a trust account within 2 banking days of receipt. This requirement protects both parties by ensuring proper fund handling and prevents commingling of client funds with the broker's operating account.
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