Who must ensure that the earnest money is handled correctly in real estate transactions?

In real estate transactions, the principal broker plays a critical role in overseeing the handling of earnest money. This responsibility includes ensuring that the funds are properly held in a trust account and that all transactions comply with relevant laws and ethical practices. The principal broker has the ultimate responsibility for the actions of their agents and support staff, which includes managing earnest money.

While the buyer may provide the earnest money and the licensee representing the seller is involved in the transaction, it is the principal broker who must ensure that all guidelines are followed. This includes maintaining accurate records, safeguarding the funds, and ensuring they are disbursed correctly at closing or if the transaction does not proceed.

An unlicensed assistant may handle some administrative tasks, but should not be responsible for the earnest money, as they lack the necessary authority and licensure to ensure compliance with legal standards. Therefore, the principal broker’s role is essential for ensuring the integrity and legality of the earnest money handling process in real estate transactions.