Return of Deposit - Real Estate Commission
The Maryland law that regulates real estate brokers, associate brokers, and salespersons requires that trust money be deposited in the broker's trust account promptly after both parties accept the contract of sale.
Although most contracts contain a provision governing the disposition of the deposit money if the property does not go to settlement, disputes often arise as to the underlying facts as well as the specific reasons for the cancellation. For this reason, brokers are often unwilling to release the funds on the request of a party claiming the right to them.
The law directs the broker to retain the funds in a trust account until one of the following four circumstances occurs:
- The transaction for which the money was entrusted is consummated or terminated;
- The broker receives proper written instructions from both parties directing withdrawal or other disposition of the money;
- A court orders disposition of the money in an interpleader case filed by the broker; or
- The broker has followed a specific procedure of notification to both parties giving them an opportunity to contest the broker's good faith determination of proper distribution after one of the parties has failed to complete the transaction.
The Real Estate Commission does not have the authority to order a broker to release trust money. If you are a party to a real estate transaction and believe that you are entitled to deposit monies, you should first contact the broker holding the funds to determine his/her position on the matter.
If the other party will not agree to sign a written release, you may ask the broker to file an interpleader case in court requesting the judge to determine who is entitled to the deposit.
If the other party failed to complete the transaction, you may ask the broker to initiate the notification process provided that the broker agrees with you that you are entitled to the money. If the broker is not willing to pursue either of these options, you may need to file a claim for the funds in court.
You should also be aware that some real estate contracts contain a provision that all disputes between the parties must first be submitted to mediation. You should read this part of your contract carefully, and check with the broker to see if it applies to this situation.