When a broker acts without a listing agreement, whose instructions must he follow regarding a buyer's deposit?

In real estate transactions, the treatment of a buyer's deposit is largely governed by agency relationships and agreements. When a broker acts without a listing agreement, they do not have a formal relationship with the seller or the listing agent, which typically outlines their obligations and duties. In this context, the broker must adhere to the instructions of the buyer concerning the deposit since they are the one who is actually representing the buyer, either explicitly or implicitly.

This means that if a buyer decides how their deposit should be handled—whether it's to be held in an escrow account, refunded, or released to a seller—the broker is obligated to follow those instructions. The buyer essentially has primary authority on how their funds should be treated, especially in scenarios where the broker has not established clear agency with the seller through a listing agreement.

In situations where there might be a conflict or a lack of clarity regarding the expectations of the seller and the responsibilities of the broker, the principles of agency law markedly emphasize the necessity for the broker to abide by the buyer's directives since the buyer retains the authority in the absence of any contrasting agreements with the seller.