Who typically holds the escrow money during a dispute?

The correct answer is that the sponsoring broker typically holds the escrow money during a dispute. In real estate transactions, escrow accounts are established to hold funds securely until certain conditions are met, such as the completion of a sale or the resolution of disputes.

When a conflict arises, the sponsoring broker steps in to manage the funds according to the terms agreed upon in the escrow agreement. This role ensures that the money is handled professionally and in compliance with legal and ethical guidelines. The broker's involvement provides an added layer of trust, as they are a neutral party whose responsibility is to keep the funds safe and release them only when the dispute is resolved or as directed by the parties involved or the relevant authorities.

In contrast, individuals such as the buyer or seller holding the escrow money could lead to conflicts of interest, while a court's involvement is typically a later step in legal proceedings rather than the initial holding of funds during a dispute. The objective is to have a knowledgeable entity, like the sponsoring broker, oversee the proper management of the escrow funds until the situation is settled.