If an earnest money dispute arises after a transaction falls through, what is the typical role of the broker?

When earnest money disputes arise, the broker faces a difficult position because of fiduciary duties to BOTH parties (or transaction broker neutrality, depending on state). The broker must NOT make a unilateral decision about who deserves the funds. PROPER PROCEDURES: (1) WRITTEN AGREEMENT — If both parties sign a release/agreement stating who gets what amount, the broker can disburse accordingly. This is the cleanest resolution. (2) INTERPLEADER — If parties cannot agree, the broker can file an interpleader action with the court (or follow state-specific commission interpleader procedures in states that have them, like Florida). The broker deposits the disputed funds with the court and steps out of the dispute. The court then decides who gets the funds. The broker may seek reimbursement of legal fees from the funds. (3) ESCROW SERVICES — Some brokerages transfer the dispute to a neutral escrow company. (4) COMMISSION-SPECIFIC RULES — Florida, for example, allows the broker to: request the parties to mediate, request a commission Escrow Disbursement Order (EDO), file an interpleader, or wait for a court order. Time limits apply to these actions in some states. (5) NEVER make a unilateral decision based on what the broker thinks is fair — even if it seems obvious, the broker risks being sued by the other party. STATE-SPECIFIC EXAMPLES: Florida has detailed procedures under Section 475.25 and the Florida Real Estate Commission rules; if a broker cannot get a written agreement, they must select from specific options: EDO, mediation, interpleader, or arbitration; they have 15 days to choose. Texas allows interpleader. California typically requires written agreement or court order. COMMON DISPUTES: (1) Buyer wants earnest money returned but seller claims buyer breached; (2) Buyer claims they exercised inspection contingency; (3) Both parties claim breach by the other. PROTECTION FOR BROKER: Document everything, including communications with both parties; do not communicate to either party that they have a 'good case'; do not provide legal advice; recommend both parties consult counsel if needed. Brokers who release funds inappropriately or hold them too long can face license discipline.