The Eager Assistant and the Escrow Shortfall
Dana has worked six months as an unlicensed marketing assistant at a New Hampshire brokerage. The firm has a listing at 128 Maple Street, listed at $415,000. On a Tuesday, the listing agent is at a closing, so Dana answers a buyer's call. Dana says, "The seller would probably take $395,000," agrees to meet the buyer at the property to "walk them through," and tells the buyer the basement "looks dry." Meanwhile, the broker uses $3,000 of a $10,000 earnest money deposit to cover payroll because the operating account is short, planning to repay on Friday. The buyer later submits an offer at $390,000.
1. Identify the license-law problems in Dana's conduct and in the broker's use of the earnest money deposit.
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Dana crossed from clerical support into licensed brokerage activity. New Hampshire license law does not permit an unlicensed assistant to discuss price or terms, show property, or make representations about condition. Quoting a likely acceptable price and agreeing to "walk them through" the property are negotiation and showing activities reserved to licensees. The basement comment is a material representation that may be false or misleading. Separately, the broker's use of $3,000 of earnest money for payroll is a trust-account violation: earnest money must be held in escrow or trust and may not be commingled with operating funds or converted to the broker's use. Even a short-term "borrow" is prohibited.
2. What should the broker do immediately about the trust account, and what risk does Dana's conduct create if the buyer's $390,000 offer is accepted?
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The broker should immediately deposit personal or brokerage funds to restore the full $10,000 to the trust account, document the shortage and cure, and review all trust records. The broker should also stop Dana from further licensed activity and provide supervision and retraining. If the buyer's offer is accepted, Dana's statements may be evidence of misrepresentation or unauthorized negotiation, and the buyer may claim reliance on the $395,000 statement or the "dry" basement comment. The broker's trust-account conduct is independently disciplinable by the New Hampshire Real Estate Commission and could expose the broker to claims by the parties.
3. Can Dana be paid, and if so, how?
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Dana may be paid only for clerical, administrative, or marketing work, such as an hourly wage or salary. Dana may not be paid a commission, referral fee, or any compensation contingent on a sale. A bonus tied to a transaction would create an inference of unlicensed brokerage. The broker should keep Dana's job description and pay records consistent with non-licensed duties.