Q: We are quite upset with our real estate broker. We signed a contract to purchase property in Maryland, and gave a $10,000 deposit to the broker. The broker held this money for almost three months, and when we went to settlement, we asked for the interest which had been earned on our deposit. The broker told us that since we did not ask that the money be put in an interest-bearing account, the deposit earned no interest. Is this illegal?

A: Unfortunately, it is legal. Unfortunately, also, it indicates the lack of concern on the part of many real estate brokers about educating home buyers.

When you sign a contract for the purchase of real estate, you usually give the broker (or your attorney) a good-faith deposit. This deposit shows your willingness to go forward with the transaction, and if you ultimately decide not to purchase the property -- after removing such contingencies as financing -- the deposit can be forfeited by the seller by way of compensation for taking the house off the market for a period of time.

The deposit is yours, however, and will be credited toward your purchase price if you do go forward with the settlement.

Real estate brokers traditionally have been reluctant to put these deposits into interest-bearing accounts. Often, they tell you that it is prohibited by law, or give you some other similar story.

The simple fact of the matter is that the deposit can be placed in an interest-bearing account, but you have to specifically ask that it be done. Why the real estate industry in reluctant to suggest it remains a mystery to me.

Thus, when you sign a contract for the purchase of real estate, add the following language to your contract:

The deposit will be placed in an interest-bearing escrow account, and the interest will be credited to purchaser if settlement takes place, or if the deposit is returned to the purchaser for any reason.

Here are some additional suggestions regarding the good-faith deposit:

If you can get away with a promissory note instead of a check, it certainly is worth the effort.

If you have to put up money for this good-faith deposit (instead of a note), try to keep the deposit as low as possible.

Ask the broker what interest you will get on your deposit. You can shop around to determine a better interest rate, and insist that your deposit be placed at the lending institution that will give you the best rate.