Under Massachusetts escrow laws, once an earnest money deposit is given, it becomes part of the transaction and must be held in the broker’s escrow account until proper written instructions are received. The critical rule is that the earnest money belongs to the buyer, not to the third party who may have supplied the funds.

Therefore, even though the parents wrote the $5,000 check, the funds legally belong to the buyers under the purchase and sale agreement. When the contract is canceled due to financing failure, and both parties (buyer and seller) agree in writing to release the deposit, the broker must issue the refund to the buyers, not the parents.

Massachusetts regulations (254 CMR 3.00) require brokers to handle escrow strictly according to the agreement and prohibit deductions for “expenses” unless explicitly authorized. Thus, the correct action is to issue the $5,000 back to the buyers in full.