Broker Escrow and Mandatory E&O Insurance
Rhode Island brokers must safeguard client money in escrow and carry mandatory errors-and-omissions insurance. This chapter covers escrow handling, disputed deposits, and the E&O requirement.
Escrow Handling
A broker must deposit client money such as earnest money into a separate escrow account and must not commingle it with the broker's own funds. Escrow handling and recordkeeping are broker responsibilities, and mishandling escrow is a serious violation subject to discipline by the DBR.
Disputed Deposits
When buyer and seller dispute earnest money, the broker must keep the funds in escrow and may not decide the dispute or take the money. Disbursement waits for the parties' written agreement, a court order, or another lawful basis. Improper release or retention of disputed escrow funds is a disciplinary matter.
Mandatory Errors and Omissions Insurance
Rhode Island requires licensees to carry errors and omissions (E&O) insurance (R.I.G.L. 5-20.5-27), which covers certain claims arising from professional real estate services. This mandatory-coverage requirement distinguishes Rhode Island from states where E&O is optional and is a common exam point.