Q: Do I have to hold the buyer’s deposits in my escrow account? What if I do not want to pay the buyer’s broker or the seller is paying the buyer broker directly?
A: As a licensed broker in Massachusetts, you are authorized to hold client funds for a real estate transaction in escrow, which means you serve as a neutral third party, holding the deposited funds pursuant to the terms of the agreement, written instructions of the parties, or court order. However, you are not obligated to serve as an escrow agent. If your brokerage policy is to not hold client funds, best practice is to discuss this with the seller at the time of the listing appointment so that you may identify a potential escrow agent at the time the parties define such escrow agent in the purchase contracts.
If you do hold funds as an escrow agent, remember those funds are not the same as the monies in your operating account. When you hold the funds in escrow, they are held pursuant to the terms of the agreement and the mutual instruction of the parties. In most cases, when the purchase is funded by the buyer and deed recorded, what you are holding in escrow are seller proceeds, subject to disbursements defined by the terms of the agreement and on the settlement statement. These disbursements usually include compensation to the listing broker, compensation to the buyer’s broker, and potentially seller’s net proceeds issued to them directly. Remember, disbursing funds out of the escrow account is just a disbursement as a neutral party, it does not make the escrow agent’s broker or business a payor unless the flow of funds is defined that way in the underlying agreement.
Q: The seller rejected my client’s offer because it included a home inspection contingency, isn’t there a new law that mandates a buyer’s right to inspect?
A: On August 6th, the Governor signed the Affordable Homes Act into law. This law includes a provision that requires the Executive Office of Housing and…