When are deposit cheques typically deposited into the listing broker's trust account?

• A. After closing
• B. Immediately on receipt
• C. Never
• D. After the offer has been accepted

Answer: (D)

The main idea here is that the earnest money or deposit is secured in the buyer’s contract by holding it in the listing broker’s trust account once there’s a binding agreement. Depositing after the offer has been accepted ensures there is a valid contract to support the money being at stake. It protects both sides: the buyer shows serious intent by putting money on the line, and the seller has a guaranteed fund to apply toward the purchase at closing or to handle if the deal falls through under the contract terms.

Depositing on receipt would be premature because there isn’t yet a binding agreement, and depositing after closing would miss the purpose of the deposit as security during the negotiation and condition periods. Depositing never would contradict the purpose of earnest money, since the contract–based deposit is a standard way to demonstrate commitment and to be dealt with according to the sale agreement. In practice, the funds are usually deposited within a short period after acceptance, and may be released or applied according to the terms of the agreement and any conditions.