§ 5-20.5-26. Escrows. (a) Escrow.

(1) Escrow accounts.

(i) Each real estate firm shall maintain an escrow account under the supervision of the broker qualified to do business in the name and on behalf of the corporate, partnership, or association licensee. All those funds paid to a salesperson or paid directly to a broker shall be segregated on the broker's books and deposited in an account in a recognized federally insured financial institution in Rhode Island separate from any account containing funds owned by the broker. A broker or salesperson shall not commingle deposit money or other customers' funds and his or her own funds; use a customer's fund as his or her own; or fail to keep an escrow or trustee account of funds deposited with him or her relating to a real estate transaction, for a period of three (3) years, showing to whom the money belongs; date deposited; date of withdrawal; to whom paid; and any other pertinent information that the commission requires. Those records are to be available to the commission and the department or their representatives, on demand, or upon written notice given to the depository. Each broker/office supervisor shall maintain a monthly report as to the status of that office's escrow account and is responsible for its accuracy.

(ii) A multi-office firm may either have an escrow account for each office or one central escrow account for the firm.

(iii) Funds held in escrow may be applied to the commission when earned by the listing company.

(iv) Whenever the ownership of any deposit monies received by a broker or salesperson pursuant to this section is in dispute by the parties to a real estate transaction, the broker or salesperson shall deposit the monies with the general treasurer within one hundred eighty (180) days of the date of the original deposit, those monies to be held in trust by the general treasurer until the dispute is mediated, arbitrated, litigated, or otherwise resolved by the parties. The parties to a real estate transaction may agree in writing to extend the time period by which the monies must be deposited with the general treasurer in accordance with regulations promulgated by the department of business regulation.

(v) The department of business regulation shall have the authority to promulgate rules and regulations with respect to such escrow accounts and the deposit of monies with the general treasurer.

(2) Escrow agents. Funds or deposits placed in escrow may be held by any person or entity legally authorized to hold funds in that capacity, e.g., the real estate broker or attorney.

(b) Dual activities. In all real estate transactions in which a broker holds more than one title, e.g., builder, contractor, or insurance agent, all deposit monies received must be placed in the broker's real estate escrow account, unless there is a contractual agreement between the principals to the contrary.

(c) Unlawful appropriation. Pursuant to § 11-41-11.1, any licensee to whom any money or other property is entrusted as escrow funds, who intentionally appropriates to the licensee's own use that money or property, or transfers the funds from an escrow account to a company or personal account prior to a closing, is guilty of unlawful appropriation.

(d) Release of funds. An escrow agent shall pay sums of money being held in an escrow account as instructed by the parties to a failed real estate transaction, within ten (10) days of receipt of a written release that has been signed by all the parties to the failed real estate transaction.

History of Section. (P.L. 1996, ch. 185, § 2; P.L. 2001, ch. 114, § 1; P.L. 2011, ch. 102, § 1; P.L. 2011, ch. 113, § 1; P.L. 2017, ch. 47, § 1; P.L. 2017, ch. 55, § 1.)