Frequently Asked Questions

Legal Hotline FAQ

A blog of the most frequently asked questions to the Maryland REALTORS Legal Hotline.

Cindy Sellers
Cindy Sellers
Cindy Sellers's Blog

What options does a broker have when there is dispute over the deposit?

A broker must execute the procedures set forth in Section 17-505 of the Maryland Real Estate Brokers Act (the Brokers Act). Section 17-505 of the Brokers Act requires the broker to maintain trust money in an authorized account until: (a) the real estate transaction for which the trust money was entrusted is consummated or terminated; (b) the broker receives proper written instructions from the owner and beneficial owner directing withdrawal or other disposition of the trust money; (c) the broker files an interpleader motion with the court, which he may do at his discretion, or the court orders a different disposition; or (d) a party fails to complete the transaction. A broker must receive a signed release by all parties to the transaction before distributing the deposit money.
If the parties are unwilling or unable to execute a release of deposit agreement, Maryland law provides a procedure that, in the absence of a signed release, authorizes the broker to notify the owner and the beneficial owner that the broker intends to distribute the trust money in the manner which, in his good faith opinion, is appropriate under the terms of the contract. The notice must be in writing and state to whom the trust money will be paid. The notice must also advise both parties that they may submit a protest within thirty days from the date the notice was delivered or mailed by the broker and that the money will be distributed as proposed by the broker if no protest is made. The notice must be either hand delivered or sent by certified mail, return receipt requested and by regular mail. It is also required that the agreement entrusting a broker with trust money contain a statement that the broker may distribute the trust money in accordance with the provisions of this law in the event that the relevant real estate transaction is not completed. If no protest is received, the broker may distribute the trust money as proposed in the notice.
If any party protests the proposed distribution of the trust money as stated in the broker’s notice, the broker may seek a court order by filing an interpleader which requires retaining legal counsel to file the necessary pleadings with the court.
Link-30 day letter

Comments are closed.