DRE Regulation # 2950 : Regulations on real estate brokers handling escrow

A real estate broker who handles an escrow under the authority of his license is subject to the following rules:

  • escrow instructions may not contain any blanks to be filled after they are signed;
  • supplemental escrow instructions are to be signed and initialed by every individual who signed and initialed the original instruction;
  • every individual who executes an escrow instruction is to be delivered a copy of the instruction;
  • books, records, and accounts are to be maintained according to accepted principles of accounting and good business practice;
  • the broker’s office, books, records, accounts, safes, files and papers relating to escrows are to be freely accessible and available for audit, inspection, and examination by the real estate commissioner;
  • all money received by the broker as an escrow agent is to be deposited in a bank trust account or escrow account on or before the close of the first full working day following the receipt of the money;
  • before withdrawing or paying out any money from an escrow transaction the broker must have written instruction from the parties depositing the money into escrow;
  • the broker must give written notice to all parties if he is aware that any real estate licensee involved in the transaction has an interest as a stockholder, officer, partner or owner of the agency holding the escrow;
  • all receipts and disbursements, as well as the name of the individual to whom those disbursements were made, are to be delivered in a written statement to each principal upon the closing of an escrow transaction [first tuesday Form 402: “Closing Statement”]; and
  • written consent is to be obtained from all involved individuals before delivering or recording any instrument which transfers a title or interest in real estate.

DRE Regulation # 2951 : Trust fund regulations on real estate brokers who act as escrow holders

A real estate broker who acts under the authority of his real estate license as an escrow holder in a real estate purchase and sale, exchange, or loan transaction, is required to follow DRE regulations governing the management of trust funds and trust fund accounts in escrow.