What should a broker do if there is a dispute over earnest money between the buyer and seller?

In a situation where there is a dispute over earnest money between the buyer and seller, the most appropriate action for a broker is to hold the funds until the dispute is resolved. This approach ensures that the broker does not take sides or make a unilateral decision that could further complicate the situation.

Holding the earnest money in a trust account allows both parties the opportunity to reach a resolution, whether through negotiation, mediation, or legal proceedings. This way, the funds are protected and available for proper distribution once the parties agree or a ruling is made regarding the dispute.

Distributing the funds, returning them to the buyer, or splitting them would prematurely resolve the issue and could lead to legal complications or claims of improper handling of the earnest money. The broker's responsibility is to maintain neutrality and act in accordance with the law and ethical guidelines, which reinforces the importance of holding the funds securely until a clear resolution is achieved.