When can trust funds be disbursed?

Trust funds are typically disbursed only when the real estate transaction has closed. This ensures that the funds are used for their intended purpose and protects the interests of all parties involved in the transaction. Closing serves as a final verification point; it confirms that all contractual obligations have been met, legal documents have been executed, and any contingencies have been resolved. By waiting until closing, the broker minimizes the risk of misappropriation or unauthorized use of the funds, which could lead to legal disputes or ethical violations.

Allowing disbursements at any time based on the broker's discretion can open opportunities for misuse and mismanagement of the trust funds. It does not provide the necessary safeguards for clients awaiting the completion of their transactions. Similarly, disbursing funds simply because they are requested by the buyer or seller can lead to complications, especially if the transaction falls through or if there are disputes related to the terms of the agreement. Furthermore, releasing funds immediately after the agreement is signed does not account for the completion of necessary due diligence or the satisfaction of obligations, which can jeopardize the fiduciary duty that the broker has toward their clients.