What is the requirement for handling earnest money in real estate transactions?

The requirement for handling earnest money in real estate transactions mandates that it must be placed into a trust or escrow account immediately or by the next business day following its receipt. This ensures the earnest money is safeguarded and distinguishes it from the personal funds of the real estate agent or brokerage. Such a procedure is crucial for maintaining transparency and trust between all parties involved in the transaction, as it verifies that the earnest money is being held responsibly and in accordance with legal standards.

Proper handling of earnest money protects the Buyer’s interests and ensures that the funds are available and accounted for during the transaction process. Adhering to this protocol helps mitigate the risk of disputes over the earnest money and reinforces the fiduciary responsibility agents have towards their clients.