According to real estate practice standards, a broker must place the earnest money deposit in an escrow or trust account immediately. Is this statement true or false?

The statement is true because real estate practice standards mandate that brokers must handle earnest money deposits with a high level of fiduciary responsibility. When a buyer makes an earnest money deposit as part of an offer to purchase property, it is crucial for the broker to safeguard this money. Placing the deposit in an escrow or trust account immediately helps ensure that the funds are protected until the terms of the transaction are fulfilled or the deal is officially closed. This practice protects all parties involved in the transaction, as it prevents potential misuse of the funds and helps maintain trust in the real estate process.

Handling earnest money appropriately is an essential component of a broker’s duties. It reflects not only legal compliance but also ethical standards in real estate practice. The immediate placement of earnest money into an account specifically designated for those funds is a necessary step in promoting transparency and accountability in real estate transactions.