See ODRE’s sample trust account ledger
1. A broker who is retiring at the end of the year has a $500 earnest money deposit in his trust account from a transaction which failed to close six years ago. What should be done with the $500?
A: When the parties to a real estate transaction can not agree on who gets the earnest money, the courts have to resolve the issue. The broker should file an interpleader action with the local small claims court. In this action, the broker is the plaintiff and the buyer and seller are the defendants. The court will determine who is entitled to the earnest money and will order disbursement accordingly.
2. When does earnest money have to be deposited?
A: Brokers must deposit earnest money into their trust or special account as soon as possible upon receipt. The Division generally considers 24-48 hours to be a reasonable time, but does weigh the circumstances in determining what is reasonable. If the purchase contract provides for deposit upon acceptance the earnest money should be deposited within 24-48 hours of acceptance.
3. Is the selling broker legally required to hold the earnest money?
A: No. There is no law which mandates who holds the earnest money. It is determined by agreement of the parties as provided in the purchase contract.
4. If a purchase contract expires, can the earnest money be returned to the buyer without a release?
A: No. The Division of Real Estate always requires a release or court order to disburse earnest money in the event a purchase contract does not close, regardless of the reason.
5. Can a seller accept another offer if there is still a dispute going on with a previous buyer over earnest money?
A: Even though the broker may still be holding earnest money from a previous contract that failed, the seller can go forward with a new offer. It is always best to recommend that the seller consult with legal counsel in this situation.