Wisconsin Real Estate Sales Practice Exam

Who can draft the agreement for holding earnest money in an interest-bearing account where the buyer benefits from the interest?

1. A real estate agent only

2. An attorney or parties

3. The broker only

4. The title company

The correct answer is: An attorney or parties

The agreement for holding earnest money in an interest-bearing account, where the buyer benefits from the interest, can be drafted by an attorney or the parties involved in the transaction. This is important because creating a legally binding document requires a clear understanding of the legal implications and responsibilities associated with the earnest money deposit. Attorneys are trained to draft legal agreements and can ensure that the document protects the interests of both the buyer and the seller, as well as outlines the terms for disbursement of the interest accrued. Additionally, the parties themselves can negotiate the terms and create an agreement, as long as they adhere to legal standards. While real estate agents and brokers play a significant role in facilitating real estate transactions, they are not authorized to draft legal agreements like this unless they hold a law degree or are specifically licensed to offer such services. Title companies can handle the escrow of funds and manage transactions but would typically follow the guidelines set forth in the agreement rather than creating it themselves.