Brokers who use lawyers as escrow agents to hold earnest money is a good risk management strategy.
Know and trust the law firm so they will around to protect the earnest money.
SCR recommends at contract formation, the law firm drafts an escrow agreement stating how the earnest money is held and how the earnest money is disbursed in a closing (e.g. credit to buyer) and how the earnest money is disbursed in a failed closing (e.g. 45 days after a failed closing date without a lawsuit against the escrow agent on the earnest money, the buyer gets their earnest money deposit returned).
The lawyer, the buyers, and the sellers all sign the escrow agreement.
Seller is protected with mediation or the 45 days to file a lawsuit against the escrow agent over the earnest money.
The buyer is protected with either the lawsuit or mediation or the default disbursement after 45 days.
The lawyer is protected with either the lawsuit or interpleader or mediation or the default disbursement after 45 days.
The broker is protected since not the escrow agent.
Posted by: Byron King on 10/02/19 (This information is only accurate as of 10/02/19. You must contact SCR for updates and changes to this information after 10/02/19 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)