Earnest Money in the Wrong Account, an Open House, and a Thank-You Check
Priya just passed her Maine sales-agent exam and joined Harbor Light Realty in Rockland. In her first month three things land on her desk at once. (1) A buyer client gives her a $10,000 earnest money check payable to Harbor Light Realty; the managing broker, who is away for a week, texts her to “park it in the business checking account until we know the deal is solid - we'll move it to escrow later.” (2) Her unlicensed assistant, Cassie, agrees to run Sunday's open house alone, where she plans to quote the list price, point out the new roof and heat pump, and collect buyer names and emails. (3) Priya wants to send $300 to a friend who is a mortgage loan officer “for sending me two buyers.”
1. Evaluate the managing broker's instruction about the $10,000 check. What must Priya do, and what are the consequences of following the instruction?
Read the worked answer
The instruction is not lawful, and Priya cannot follow it.
- Earnest money is other people's money. It must be deposited promptly into the brokerage's designated trust/escrow account - not the operating account - and it must not be commingled with business funds or used for any business purpose, even for two days.
- Putting client funds in the business account is commingling; spending or risking them is conversion. Both are grounds for discipline regardless of whether the deal closes and regardless of whether the buyer ever notices.
- “Until we know the deal is solid” is also a red flag on disbursement: escrowed funds are released only as the contract directs, on the parties' written authorization, or by court order. The broker's comfort level is not a release mechanism.
- Priya's response: deposit the check into the escrow account now, notify the broker in writing what she did and why, keep the deposit record, and ask for the escrow procedures in writing. A licensee is not excused by a supervisor's bad instruction - and the broker's failure to supervise is itself a separate problem for the brokerage.
- If the broker repeats the instruction on return, escalate to the designated broker and document. Keeping the check in a desk drawer “until Monday” has the same defect as the operating account: it is undeposited client money with no audit trail.
2. May Cassie run the open house as planned? Identify what she may and may not do, and who bears responsibility.
Read the worked answer
No - not as planned. Activities that require a license may not be performed by an unlicensed assistant, and the plan crosses the line on several points.
Not permitted for Cassie:
- Quoting price or terms, or discussing financing, offers, or seller motivation.
- Describing property features as a sales inducement (“look at this new roof and heat pump” as a pitch). She may read from the prepared listing sheet if asked a factual question, but she may not market or promote.
- Soliciting or registering buyers for follow-up as a lead-generation activity, and certainly not advising them.
- Holding herself out as an agent, negotiating, or answering questions about the seller's willingness to accept less.
- Being paid any portion of a commission - unlicensed staff are paid wages or hourly, not splits.
Permitted: handing out preprinted brochures, providing factual information already in the listing, stating that a licensee will follow up, and taking names for the licensee's sign-in sheet if the brokerage's policy allows it - with the brokerage's name on all materials.
Responsibility: Priya and the managing broker. A sales agent supervises her own assistant; the broker supervises the office. Advertising and open houses must show the brokerage name, and an unlicensed person performing licensed acts exposes both the assistant's employer and the brokerage to Commission discipline. The fix is simple: Priya staffs the open house herself, or Cassie attends with a clear written list of what she may say.
3. Can Priya send $300 to the loan officer? Explain the two separate prohibitions at work and what a compliant alternative looks like.
Read the worked answer
No. There are two independent problems.
- State licensing law - paying for brokerage activity. A licensee may not share compensation with, or pay a fee to, an unlicensed person for activity that requires a real estate license. Referral-hunting is licensed activity. Priya's own compensation must flow through her broker, and the broker cannot split it with an unlicensed person either.
- Federal law - RESPA Section 8. Paying anything of value for the referral of settlement service business on a federally related mortgage loan is prohibited. A $300 “thank-you” to a loan officer for two buyer referrals is exactly the arrangement Section 8 targets, and it carries civil and potentially criminal exposure for both the payer and the recipient.
Warning signs to avoid disguising it: calling it a gift card, a “marketing co-op,” a lunch, or a gas card; timing it to closings; or having the loan officer reciprocate with a payment back. A thing of value given because of a referral is a kickback whatever the label.
Compliant alternatives:
- Joint marketing where each party pays its own way and no payment is conditioned on referrals.
- Genuine, non-referral business relationships - co-hosting a first-time-buyer class, sharing a booth at a community event, or a lender-paid lunch for an office training session, documented as advertising/education.
- Referral fees only between properly licensed real estate brokers under a written cooperative agreement, with disclosure as required.
Priya should also ask whether the loan officer has sent the brokerage a written referral agreement - if the “two buyers” were steered to her as an inducement for future payment, both of them have a problem.