Who must agree before a broker can deposit earnest money into an interest-bearing account?

The requirement for both the buyer and the seller to agree before a broker can deposit earnest money into an interest-bearing account is rooted in the principles of agency and fiduciary responsibility in real estate transactions. When earnest money is tendered, it represents a commitment to the transaction, and both parties have vested interests in how that money is handled.

By obtaining agreement from both parties, the broker ensures that the interests of both the buyer and the seller are considered and that there is transparency regarding the management of the funds. This mutual consent is crucial to avoid any disputes later, especially regarding who earns the interest on the deposited funds and what happens to the earnest money if the transaction does not proceed as planned.

The process protects the rights and expectations of both parties, aligning with ethical practices in real estate transactions. In the absence of agreement from either party, a broker might inadvertently place themselves in a position of liability or risk misinterpreting the terms of the transaction. Thus, working with both parties in this context is essential to uphold trust and clarity in the brokerage relationship.