Virginia Escrow & Trust Accounts

Virginia and Board rules treat client money as sacred: it goes in a separate, labeled escrow account, is never mixed with operating funds, and is not released until the contract, the parties, or a court authorizes it. The salesperson exam tests this lightly; the broker exam allots far more items (about 7 state questions) because the principal broker is legally responsible for the accounts.

Must-know distinctions

Commingling

Mixing client trust funds with the broker's own money or operating account — prohibited (18VAC135-20-181).

Conversion

Misappropriating client trust money for personal or business use — a serious violation.

Fifth business banking day

Earnest money to be held by the firm must be deposited by the end of the fifth business banking day after contract ratification, unless the principals agree otherwise in writing (§54.1-2108.2).

Outside escrow agent

If the firm will not hold the deposit, the broker must deliver it to the named escrow agent by the end of the fifth business banking day after receipt, unless the parties agree otherwise in writing.

Disputed earnest money

If buyer and seller disagree, the broker holds the deposit pending written mutual release, interpleader into court, or a clear contractual disbursement rule — do not pick a side.

Record retention

Transaction-related records are typically retained three years from closing or listing expiration (exam standard).

Broker supervision (broker-weighted)

• Each firm must keep one or more federally insured accounts labeled 'escrow' in the licensed firm name.
• The principal broker is responsible for the accounts and must have signatory authority. A supervising broker or other licensee with signatory authority can also be held responsible.
• The escrow balance must always be enough to cover every dollar the firm is holding for others.
• Rents, security deposits, application deposits, and money advanced for closing expenses are escrow funds too — not just purchase earnest money.