3.0 hours Avoiding Common Mistakes Course Syllabus
3.0 Elective Hours.
Let's look at how earnest money should be handled properly to reduce detrimental impact that it could have on a real estate transaction.
Both the listing broker and the selling broker are required to adhere to strict policies and procedures surrounding the handling of funds held for others. Violations and mishandling of these funds may result in civil suits, criminal proceedings, and disciplinary action. The result could be a monetary fine and/or suspension or revocation of the brokerage or broker's real estate license.
Usually, the broker representing the buyer will be responsible for collecting the earnest money. This deposit must be collected and deposited according to the terms of the Purchase and Sale Agreement. The funds must be deposited in the selling broker's trust account or in a trust account and held by the closing agent (escrow).
There are many procedures which must strictly be adhered to in the handling of these trust. These deposits must be kept in a separate trust account and are not allowed to be commingled with any other funds. Cash is an acceptable form of earnest money, but most brokerages discourage this because the funds are more difficult to document.
In any business, it’s common that mistakes will be made. This course reviews the most common mistakes. Also discussed are earnest money, its forms, and the proper handling of these funds and vicarious liability.