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Real Estate · Trust/Escrow Accounts

What is the general rule for how a salesperson should handle earnest money received from a buyer?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

Promptly turn it over to their broker (or deposit it as the broker directs) so it can be placed in the broker's trust account, rather than holding or using it personally

  1. A Promptly turn it over to their broker (or deposit it as the broker directs) so it can be placed in the broker's trust account, rather than holding or using it personally
  2. B Give it directly to the seller immediately
  3. C Keep it in a personal account
  4. D Spend it on marketing

Why this is the answer

A salesperson who receives earnest money or other trust funds must not hold them personally or deposit them in a personal account. The general rule is that the salesperson promptly delivers the funds to their employing broker, who deposits them into the brokerage trust (escrow) account within the time required by state law. The money is then held and accounted for until the transaction closes or the parties agree on its disposition. Holding, depositing personally, or delaying delivery of trust funds is a serious violation. While exact deposit deadlines vary by state, the principle that the salesperson channels trust money to the broker for proper handling is consistent.
Source: Real Estate State Portion, Handling Earnest Money

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About this topic: Trust/Escrow Accounts

Trust and escrow account questions at salesperson level cover delivering funds to the broker promptly, what may not be done with client money, and how disputes over earnest money are resolved. This is one of 4 Salesperson (State Law) questions on trust/escrow accounts, each with a full explanation on a single study page.

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Related questions

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If a buyer and seller dispute who is entitled to the earnest money after a failed contract, what is the BEST action for the broker?

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What is the general consequence if a licensee or broker uses trust funds for their own purposes?

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