What must occur when an earnest money dispute arises and both parties cannot agree on its release?

When an earnest money dispute arises and the parties involved cannot agree on the release of the funds, the broker can interplead the funds. Interpleading is a legal process that allows the broker, who is holding the earnest money, to file a motion in court to have the money held until a judge determines the rightful owner. This is crucial because the broker has a fiduciary responsibility to both parties and cannot simply take sides or decide how the funds should be disbursed without a legal directive.

Choosing to interplead ensures that the broker is following legal protocols and protecting themselves from any liability that might arise from improperly releasing the funds. This process also ensures that a fair resolution is sought through legal channels, as both parties will have the opportunity to present their case before a neutral third party.