Virginia Administrative Code › Title 18 - PROFESSIONAL AND OCCUPATIONAL LICENSING › Agency 135 - REAL ESTATE BOARD › Chapter 20 - VIRGINIA REAL ESTATE BOARD LICENSING REGULATIONS › Part V - Standards of Practice and Conduct › Section 18VAC135-20-180 - Maintenance and management of escrow accounts

Current through Register Vol. 40, No. 24, July 15, 2024
A. Maintenance of escrow accounts.
1. If money is to be held in escrow, each
				  firm or sole proprietorship shall maintain in the name by which it is licensed
				  one or more federally insured separate escrow accounts in a federally insured
				  depository into which all down payments, earnest money deposits, money received
				  upon final settlement, application deposits as defined by § 55.1-1200 of
				  the Code of Virginia, rental payments, rental security deposits, money advanced
				  by a buyer or seller for the payment of expenses in connection with the closing
				  of real estate transactions, money advanced by the broker's client or expended
				  on behalf of the client, or other escrow funds received by the broker or his
				  associates on behalf of his client or any other person shall be deposited
				  unless all principals to the transaction have agreed otherwise in writing. The
				  balance in the escrow accounts shall be sufficient at all times to account for
				  all funds that are designated to be held by the firm or sole proprietorship.
				  The principal broker shall be held responsible for these accounts, including
				  having signatory authority on these accounts. The supervising broker and any
				  other licensee with escrow account authority may be held responsible for these
				  accounts. All such accounts, checks, and bank statements shall be labeled
				  "escrow" and the accounts shall be designated as "escrow" accounts with the
				  financial institution where such accounts are established.
2. Funds to be deposited in the escrow
				  account may include moneys that shall ultimately belong to the licensee, but
				  such moneys shall be separately identified in the escrow account records and
				  shall be paid to the firm by a check drawn on the escrow account when the funds
				  become due to the licensee. Funds in an escrow account shall not be paid
				  directly to the licensees of the firm. The fact that an escrow account contains
				  money that may ultimately belong to the licensee does not constitute
				  "commingling of funds" as set forth by subdivision C 2 of this section,
				  provided that there are periodic withdrawals of said funds at intervals of not
				  more than six months and that the licensee can at all times accurately identify
				  the total funds in that account that belong to the licensee and the
				  firm.
3. If escrow funds are used
				  to purchase a certificate of deposit, the pledging or hypothecation of such
				  certificate, or the absence of the original certificate from the direct control
				  of the principal or supervising broker, shall constitute commingling as
				  prohibited by subdivision C 2 of this section.
4. Lease transactions: application deposits.
				  Any application deposit as defined by § 55.1-1200 of the Code of Virginia
				  paid by a prospective tenant for the purpose of being considered as a tenant
				  for a dwelling unit to a licensee acting on behalf of a landlord client shall
				  be placed in escrow by the end of the fifth business banking day following
				  approval of the rental application by the landlord unless all principals to the
				  lease transaction have agreed otherwise in writing.