What should a sponsoring broker do if a dispute about escrow money arises?

When a dispute about escrow money arises, the appropriate action for a sponsoring broker is to not release the funds without a written release from both parties. This approach ensures that the broker remains neutral and does not take sides in the dispute, which could lead to further complications or claims of impropriety.

Escrow is a protective measure to safeguard funds until certain conditions are met; therefore, the broker must adhere to the contractual obligations surrounding the escrow agreement. By requiring a written release from both parties, the broker protects their legal standing and ensures that no party is unfairly disadvantaged. This practice also upholds the principle of fiduciary duty, where the broker is obligated to act in the best interest of all parties involved.

While other options might seem reasonable, they could expose the broker to legal risks or potential liability. For instance, releasing the money to either party without mutual consent could lead to claims of misappropriation, while holding the funds indefinitely could create frustration and might not be compliant with the terms of the escrow arrangement. Asking the court for guidance may be necessary in some complex situations, but it is generally preferred to have both parties agree to the release, thereby minimizing disputes and maintaining trust in the transaction process.