230 R.I. Code R. 230-RICR-30-20-2.18

Current through December 3, 2024

Section 230-RICR-30-20-2.18 - Client Funds

A. Escrow Accounts

1. The principal broker shall be responsible for the escrow accounts maintained on behalf of the brokerage and its offices.

2. Escrow accounts shall be so designated by the financial institution in which the account is located, and on all deposit tickets and checks drawn on the account. In addition, the monthly bank statement for the account shall bear the words, "Trust Account" or "Escrow Account."

3. Funds designated for escrow shall be deposited in the escrow account of the principal broker of the seller or landlord, unless otherwise agreed to in writing by the parties to the real estate transaction.

4. Funds designated for escrow shall be deposited in the escrow account promptly after the execution of the purchase and sales agreement or, in the case of a rental, promptly after receipt of the funds.

5. Funds held in escrow may be applied to the commission when earned by the respective licensees only at the time of, or subsequent to, the closing of the real estate transaction.

6. A licensee shall not convert the money or property of others to his or her own use, apply such money or property to a purpose other than that for which it was paid or entrusted to him or her, or permit or assist any other person in the conversion or misapplication of such money or property.

7. The maintenance of nominal amounts of the licensee's funds in escrow accounts solely to provide continuity in such accounts or to meet bank service charges shall not be construed to be commingling.

8. In the absence of any agreement to the contrary, the interest on monies placed in an interest-bearing escrow account shall accrue to the licensee.

9. If a statute or Regulation compels the maintenance of a fixed amount of funds in a licensee's escrow account in addition to client or consumer funds, the maintenance of such fixed amount shall not be construed to be commingling.

B. Salespersons and Teams are Prohibited from Holding Client Funds.

1. An affiliated licensee shall turn over all deposit monies received promptly to his or her principal broker or, at the direction of the principal broker, deposit the funds in the principal broker's escrow account.

2. Teams shall not maintain a separate escrow account from the Principal Broker. Teams shall utilize the one (1) escrow account established under the control of the Principal Broker.

C. Sellers and Deposits

1. A licensee may permit a buyer to draft a deposit check payable to seller only if:

a. The listing agreement so provides; and

b. The seller's designated client representative or the neutral transaction facilitator informs the buyer in writing that the seller does not have any obligation to place the deposit monies in an escrow account.

2. When the listing agreement requires that the seller retain the deposit, the deposit check shall not be made payable to anyone but the seller.

3. Except as provided herein, a licensee who receives deposit funds payable directly to him or her shall not turn the funds over to a seller.

D. Dual activities

1. In real estate transactions in which a principal broker and/or his or her affiliated licensees participate in additional capacities (e.g., seller, builder, contractor, or insurance agent), all deposit monies received by the principal broker must be placed in his or her real estate escrow account, unless there is a contractual agreement between the principals to the contrary.

2. Any contractual agreement that provides for the deposit funds to be placed in an account other than the principal broker's escrow account must comport with the following:

a. The agreement must be in writing;

b. The agreement must include language that informs the buyer or renter that he or she forfeits the protections for monies placed in an escrow account in the event of a dispute over the real estate transaction; and

c. All parties to the real estate transaction must sign the agreement.

E. Security Deposits Relating to a Lease or Rental Agreement. Security deposits held by a landlord following the execution of a lease are governed by R.I. Gen. Laws § 34-18-19. The requirements of this Regulation apply only to deposit funds held by a licensee prior to the execution of the lease or rental agreement.

230 R.I. Code R. 230-RICR-30-20-2.18

Amended effective 11/27/2019
Amended effective 5/1/2021
Amended effective 2/21/2022