What should be done if earnest money is received as a nondepositable item?

When earnest money is received as a nondepositable item, it should be deposited with an authorized escrow agent. This is essential for ensuring that the funds are handled properly and in compliance with legal requirements. By depositing the earnest money with an authorized escrow agent, it provides a level of security and trust for both the buyer and seller, as the escrow agent is responsible for managing the funds until the transaction is resolved.

An authorized escrow agent acts as a neutral third party who can protect the interests of all parties involved in the real estate transaction. This process helps to ensure that the earnest money is not misused and is available for its intended purpose, which is to demonstrate the buyer's serious intent to proceed with the purchase.

Additionally, improper handling, such as keeping the earnest money in the broker's office or mailing it back to the buyer, may expose the parties to risks or potential legal issues. Ignoring the earnest money until cash is received could result in complications related to the transaction status or buyer's commitment, which further illustrates the importance of following proper procedures with nondepositable items.