Michigan License Law Practice Test

What happens if a broker does not deposit earnest money timely?

1. No action is taken

2. They may be subject to disciplinary action

3. Earnest money becomes the property of the broker

4. They will face an automatic fine

The correct answer is: They may be subject to disciplinary action

When a broker fails to deposit earnest money in a timely manner, they may be subject to disciplinary action. Timely deposit of earnest money is considered a critical aspect of real estate transactions, as it protects both the buyer and seller by demonstrating the buyer's serious intent to purchase the property. Consequences for failing to adhere to this requirement could include penalties from the Michigan Department of Licensing and Regulatory Affairs (LARA) or potential sanctions from the Michigan Board of Real Estate Brokers and Salespersons. Disciplinary actions may range from reprimands and fines to suspension or revocation of the broker's license, depending on the severity and frequency of the infraction. This highlights the importance of compliance with legal and ethical responsibilities in real estate transactions. Timeliness in handling earnest money is essential for maintaining trust and professionalism in real estate practices.