What should a broker do with a buyer's earnest money check received during a transaction?

When a broker receives a buyer's earnest money check during a real estate transaction, the appropriate action is to deposit it in a special bank account designated for clients. This is often referred to as an escrow or trust account.

Such an account ensures that the funds are kept separate from the broker's personal or general operating accounts, maintaining accountability and protecting the buyer’s funds until they are either applied toward the purchase or returned in accordance with the terms of the purchase agreement. By using a special bank account, brokers adhere to legal and ethical standards that govern the handling of client funds, providing transparency and security during the transaction process.

This practice also helps prevent any potential conflicts of interest or misuse of funds, which could arise if the money were mixed with the broker's personal finances. Proper handling of earnest money fosters trust between buyers and brokers, ensuring a smooth transaction process.