The disposition of any interest earned on funds held in an escrow or trust account is governed by the contractual agreement between the principals of the transaction, typically the buyer and seller. The purchase agreement or a separate escrow agreement should explicitly state who is entitled to the interest. A broker, acting as a fiduciary, holds the funds in trust and cannot benefit from them by claiming the interest unless all parties provide express written consent. In the absence of an agreement, state laws may dictate the outcome, but the primary determinant is the mutual agreement of the parties.

A. The broker is a fiduciary and cannot personally profit from client funds without explicit agreement; doing so would be the illegal act of conversion.

B. While the buyer and seller are the principals, there is no default rule for an equal split; the distribution is determined by their specific agreement.

C. Brokers are agents, not the owners of the funds, and therefore have no inherent right to any interest earned on the principals' money.

1. California Department of Real Estate. (2020). Real Estate Reference Book. Chapter 10: Trust Funds, p. 218.

Quote/Paraphrase: The text explicitly states, "The purchase agreement offer should specify the party to be credited with any interest earned... A broker may not receive any interest from a trust fund account without the express written consent of the owner of the funds." This directly supports that the disposition is subject to an agreement.

2. Jennings, M. M. (2017). Real Estate Law (11th ed.). Cengage Learning. Chapter 10: The Agency Relationship in Real Estate, Section on "Duty of Accounting".

Quote/Paraphrase: This university textbook explains the broker's fiduciary duty to account for all funds entrusted to them. This duty extends to any interest accrued on those funds. The funds and their earnings belong to the principals, and their distribution must be handled according to the contract and state law, not for the broker's benefit.

3. Floyd, C. F., & Allen, M. T. (2018). Real Estate Principles (11th ed.). Dearborn Real Estate Education. Chapter 11: Real Estate Brokerage and Management.

Quote/Paraphrase: This text, commonly used in university real estate programs, clarifies that earnest money deposits must be placed in a separate trust account. It emphasizes that state laws and the terms of the purchase contract dictate how these funds, including any interest, are handled. It reinforces that brokers cannot commingle or convert these funds for their own use.