If a broker is not acting as the closing agent and receives earnest money from the buyer, what may the broker do prior to closing?

• A. Disburse funds to the seller
• B. Write a check on the escrow account to transfer funds to the closing agent
• C. Invest funds in a money market
• D. Withdraw funds for personal use

Answer: (B)

Earnest money held by a broker sits in a trust or escrow account and belongs to the buyer until closing. Before closing, the proper step is to move those funds to the person handling the closing so the transaction can be funded at settlement. Writing a check on the escrow account to transfer funds to the closing agent accomplishes this, ensuring the closing agent has the buyer’s funds to apply as part of the closing proceeds. This action fits fiduciary duties and escrow rules because the money stays in a trusted account and is disbursed only for the closing per the agreement. Disbursing funds to the seller early, investing for the broker’s benefit, or taking money for personal use would violate those duties and the rules governing trust funds.