What must a broker do with earnest money funds upon receipt?

When a broker receives earnest money funds, the appropriate action is to deposit them into a trust account within three business days. This requirement is in place to ensure that earnest money is handled appropriately and protects the interests of all parties involved in the transaction. Depositing the funds into a trust account maintains a clear record of the funds and safeguards them until closing or until a decision is made regarding the transaction.

This practice also helps in compliance with regulations governing real estate transactions, as it ensures that buyers’ funds are managed transparently and responsibly. Timely deposit of earnest money contributes to the overall credibility and professionalism of the broker, instilling confidence in clients regarding their financial contributions to the transaction.