California Real Estate SalespersonPractice of Real Estate and DisclosuresHard
A buyer submits a personal check as a good faith deposit with written instructions asking the broker to hold the check uncashed until the seller accepts the offer. What is the broker's obligation regarding this arrangement?
- AThe broker must deposit the check into the trust account immediately regardless of the buyer's instructions
- BThe broker may hold the check uncashed without informing the seller since it is the buyer's instruction
- CThe broker must return the check to the buyer if the seller does not respond within 24 hours
- DThe broker must disclose to the seller that the funds are being held uncashed and have not yet been deposited
Show answer & explanationAnswer & explanation
Correct answer: D. The broker must disclose to the seller that the funds are being held uncashed and have not yet been deposited
When a buyer instructs that a deposit check be held uncashed, the broker must disclose this arrangement to the seller, typically through a written addendum, so the seller is aware the funds have not actually been deposited before deciding whether to accept the offer.
Why the other options are wrong
- A. The broker may honor the buyer's hold-uncashed instruction, but disclosure to the seller is still required.
- B. Failing to disclose this arrangement could mislead the seller about the buyer's financial commitment.
- C. There is no automatic 24-hour return rule tied to seller response time.
Uncashed Deposit Check Disclosure
When a buyer's earnest money check is to be held uncashed per instructions, the broker must disclose this fact to the seller before or with offer presentation.
- Buyer may request the check be held until offer acceptance
- Broker must disclose this arrangement to the seller in writing
- Failure to disclose can mislead seller about buyer's actual funds committed
Memory trick: Hold it, but tell the seller — no secret uncashed checks.