Q: I have just received my real estate sales agent license is Maryland. In preparing a contract for the sale of my first house, the prospective buyer wanted the earnest money deposit to be placed in an interest-bearing account, with interest to the buyer at settlement. My broker told me that Maryland law prohibited us from putting these deposits in interest-bearing accounts. What's the rationale for this anti-consumer prohibition?

A: There's never any rationale for anti-consumer rules and regulations. Your broker is just plain wrong. Every provision to the real estate contract is negotiable, and if you and your seller agreed that the deposit will bear interest until the date of settlement, this is the way it should be.

The subject of "good faith" deposits should be divided into at least three subtopics:

First: How much? Needless to say, the seller wants to get as much money down. If the buyer defaults, the deposit can be used to compensate the seller for taking the house off the market for a period of time. But the buyer may not want to tie up a large sum well in advance of settlement. Indeed, the buyer may not presently have all the money at the time the contract is signed.

Negotiate! The parties will ultimately agree on an amount somewhere between a handshake (favorable to the buyer) and 10 per cent of the sale price (favorable to seller).

Second: Who holds? If there is no real estate agent, I strongly recommend that the seller not hold the deposit. The buyer has no guarantee that the seller in fact owns the property. Additionally, the seller can spend the money in advance of settlements, and may not have any money to be refunded if the deal does not go through. It is suggested that the deposit be held either by the buyer's attorney, or in a joint deposit with a local savings and loan association.

Third: Why not put it in an interest-bearing account? Let's assume the buyers puts down $2,500 for a settlement to take place 90 days later. At average passbook interest rates, the buyer would get approximately $31.25 in interest at settlement. While this amount may seem small to some, why should the bank use your money for free? Equally important, don't forget that the buyer generally has to take this money out of a savings account anyway, so why lose money unnecessarily?

Any amount of deposit, no matter how small or large, can be put in an interest-bearing account. And this holds just as well whether the deposit is being held for 30 days or longer. Many real estate firms do not like to be bothered by the minor amount of work involved, and thus try to discourage such interest accounts - or set arbitrary levels above which the amount will draw interest. If your sales agent balks at using such an account, see your lawyer. Use the following language in the offer to purchase:

"The deposit will be placed in an interest-bearing account with interest to accrue to purchaser at settlements."

Needless to say, the seller must agree to this, but I see no valid reason for a seller to object.

And, incidentally, this discussion on the good faith deposit is applicable in the District of Columbia and in Virginia.

Benny L. Kass is a Washington attorney. Write him in care of the Real Estate section, The Washington Post, 1150 15th St. NW, Washington 20071.