Under state law, when a broker holds an earnest money deposit and a dispute arises between buyer and seller over who is entitled to it, what should the broker generally do?

DISPUTED EARNEST MONEY: When buyer and seller DISPUTE who is entitled to the earnest money deposit the broker holds in trust, the broker must NOT unilaterally decide or release the funds to one party. PROPER ACTIONS: HOLD the funds in the trust account until the dispute is resolved by: a written AGREEMENT signed by both parties directing the disbursement; a COURT ORDER; or INTERPLEADER (the broker deposits the disputed funds with a court and lets the court decide who gets them); some states allow the broker to follow specific statutory procedures or to deposit with the commission; WHY: The broker is a neutral escrow holder, not a judge; releasing to one party (or keeping it) could expose the broker to liability and license discipline; the broker has no authority to decide the merits of the dispute; the broker must protect the funds and follow a lawful resolution process; MEDIATION/ARBITRATION: The contract may specify dispute resolution; STATE-SPECIFIC: Procedures and timeframes vary; the rule that a broker must hold disputed trust funds and not unilaterally disburse them (resolving via agreement, court order, or interpleader) is important trust-fund/state-law knowledge tested on the broker exam — protecting both the funds and the broker.