Escrow, Trust Accounts, and Commingling
Handling other people's money is the most broker-distinctive competency, and Virginia tests brokers on it more heavily than salespersons. This chapter covers Virginia escrow rules, the prohibition on commingling, and disputed deposits.
Holding Client Funds
A Virginia broker who holds client money, such as an earnest-money deposit, must place it in a separate escrow account and must not commingle it with the broker's personal or business funds or convert it. The Board's regulations set requirements for how and when deposits are made and how the account is maintained. The broker is accountable for the funds and may disburse them only as the contract and the parties' agreement allow.
The Prohibition on Commingling
Commingling, mixing client trust money with the broker's own funds, and conversion, using client money for the broker's own purposes, are serious violations of Virginia license law. The broker exam includes more escrow items than the salesperson exam because the broker controls the escrow account and bears responsibility for its integrity. Keeping trust money strictly separate protects consumers and the broker.
Disputed Deposits and Recordkeeping
When the parties make conflicting demands for an escrow deposit, the Virginia broker acts as a neutral party and should not release the funds unilaterally; the Board's regulations provide lawful ways to handle a disputed deposit, and the broker may retain the funds until the dispute is resolved. Brokers must keep accurate escrow records and reconcile the account, and unexplained shortages are grounds for discipline.