Handling of Disputed Earnest Money Deposits by Lawyer Escrow Agents
QUESTION: I am a buyer’s agent in a sale that has fallen through. The seller refuses to authorize the return of the earnest money deposit to the buyer even though it is very clear that the buyer is entitled to get it back. The deposit is being held by a lawyer. The lawyer says that the Offer to Purchase and Contract (form 2-T) prohibits her from disbursing the deposit until she either gets a written release from the parties or a court orders it to be released. Is that right? If so, may the lawyer pay the disputed earnest money deposit into the clerk of court’s office?
ANSWER: In signing the Escrow Agent Acknowledgement at the end of the Contract, the escrow agent acknowledges receipt of the earnest money deposit and agrees to “hold and disburse the same in accordance with the terms hereof.” In the ‘NOTE” under the blank where the escrow agent’s name is inserted, a non-broker escrow agent agrees to retain a disputed earnest money deposit in the escrow agent’s trust account in accordance with the same rules that govern real estate brokers. So the lawyer is correct that she cannot refund the deposit to the buyer under the existing circumstances.
Regarding your second question, effective October 1, 2011, the law permitting the payment of disputed monies to the clerk of court was expanded to apply to both real estate brokers and lawyers. Thus, the lawyer does now have the option of paying the earnest money deposit in your transaction into the clerk’s office.
This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.