Maine Real Estate License Practice Exam

If earnest money is kept in an account other than the listing agency's trust account, which statement is true?

1. The listing agency holds liability

2. The listing agency has no liability as trustee

3. Earnest money must be in an attorney's account

4. Maine law mandates a trust account

The correct answer is: The listing agency has no liability as trustee

The assertion that the listing agency has no liability as trustee is accurate under certain circumstances where earnest money is kept outside the agency's designated trust account. In real estate transactions, earnest money is typically held in a trust account to ensure that the funds are managed properly and are available for disbursement according to the terms of the transaction. However, if the earnest money is deposited into an account that is not the listing agency’s trust account, it may create a situation where the listing agency cannot be held liable for the management of those funds as they are not acting as a trustee in this context. It is important to note that, while keeping earnest money in an account other than a trust account is generally discouraged because it complicates the responsibility associated with handling those funds, the agency might not be directly accountable if proper procedures regarding earnest money handling are not followed. In contrast, the other options introduce various misunderstandings about statutory obligations and agency liabilities. Maine law indeed does mandate that earnest money is held in a trust account, however, if it is held elsewhere, the liability indeed shifts under specific conditions, which supports the selected answer. Understanding these dynamics is essential for real estate professionals to maintain compliance with legal standards while also protecting their interests and those of their clients