A buyer ' s earnest-money check has been deposited into the broker ' s escrow...

The correct answer is B. Escrow funds are held by the broker as money belonging to others during the pendency of the transaction. The broker has no personal claim to that money merely because it has been deposited into the brokerage escrow account.

Massachusetts regulation 254 CMR 3.10 requires transaction money held by a broker to be deposited into an escrow account unless the parties have agreed otherwise in writing. The broker remains responsible until the transaction is consummated or terminated, at which point a proper accounting and distribution must be made.

Therefore, deposit money should not casually be described as automatically belonging outright to either buyer or seller while contractual rights remain unresolved. Its ultimate disposition depends on performance, termination provisions, valid agreements between the parties, or potentially legal resolution of a dispute.

A salesperson may not hold client funds independently; deposit money received must be promptly turned over to the employing broker.

Study Guide Reference: Massachusetts License Law — Client Funds, Escrow Accounts and Deposit Handling.