Question

If a broker receives a deposit check with a purchase contract, which of these is he not allowed to do?
A. Deposit it directly into escrow.
B. Give it to the principal.
C. Deposit into the brokerage business account.
D. Hold it with the buyer's permission until the contract is accepted.

Answer 1

Answer:

C) Deposit into the brokerage business account.

Explanation:

The broker does not own the money, therefore it cannot make a deposit to its own account. Once the sale is completed, the broker collects its fees, but it cannot collect earnest money or any other type of deposit as advanced fees. It is OK for them to keep the check if the buyer gives them permission but they cannot attempt to cash it for themselves or deposit the check in their account.