Delivery of Earnest Money Deposit More Than 3 Days Following Contract
Release Date: 7/6/2011; revised 5/14/2014
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applicable legal and ethical principles for member education only. They do not constitute legal
advice. If you or a client requires legal advice, the services of a private attorney should be
sought. Always consult your broker-in-charge when faced with a question relating to the
practice of real estate brokerage.
QUESTION: I just received an offer on one of my listings. The offer is on the Offer to Purchase
and Contract (form 2-T). The offer designates my firm as the escrow agent but no earnest money
was received with the offer. Instead, the buyer checked the box indicating that the initial earnest
money deposit will be delivered within five days of the Effective Date of the Contract in the
form of a personal check. If the seller accepts the offer and funds are not received for five days,
will I be in violation of the Real Estate Commission Rule that requires all earnest money deposits
to be deposited into a trust or escrow account not later than three banking days after acceptance?
ANSWER: No. The rule you are referring to regulates the handling and accounting of funds
once they are received by the brokerage. The applicable rule is Rule A.0116(b)(3) which can be
found in Subchapter 58A of the North Carolina Administrative Code. The rule provides:
"Earnest money or tenant security deposits paid by means other than currency and received by a
broker in connection with a pending offer to purchase or lease shall be deposited in a trust or
escrow account no later than three days following acceptance of such offer to purchase or lease;
the date of such acceptance of such offer or lease shall be set forth in the purchase or lease
agreement."
The quoted language permits a broker acting as an escrow agent to hold an earnest money check
without depositing it until such time as a contract has been signed by both buyer and seller. Once
a contract is signed, any check received by the broker must be deposited within three banking
days after acceptance. However, where the Contract permits the buyer to deliver his earnest
money check five days after the effective date of the Contract, the escrow agent would still have
three banking days from receipt of that check to deposit the check in his or her trust or escrow
account.
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