§ 5-20.5-26 - Escrows.
SECTION 5-20.5-26
§ 5-20.5-26 Escrows. – (i) Each real estate firm shall maintain an escrow account under thesupervision of the broker qualified to do business in the name and on behalf ofthe corporate, partnership or association licensee. All those funds paid to asalesperson or paid directly to a broker shall be segregated on the broker'sbooks and deposited in an account in a recognized federally insured financialinstitution in Rhode Island separate from any account containing funds owned bythe broker. A broker or salesperson shall not commingle deposit money or othercustomers' funds and his or her own funds, use a customer's funds as his or herown, or fail to keep an escrow or trustee account of funds deposited with himor 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 whompaid, and any other pertinent information that the commission requires. Thoserecords are to be available to the commission and the department or theirrepresentatives, on demand, or upon written notice given to the depository.Each broker/office supervisor shall maintain a monthly report as to the statusof that office's escrow account, and is responsible for its accuracy.
(ii) A multi-office firm may either have an escrow accountfor each office or one central escrow account for the firm.
(iii) Funds held in escrow may be applied to the commissionwhen earned by the listing company.
(iv) Remaining escrow funds shall be brought to the closingfor disbursement by the closing officer.
(v) Whenever the ownership of any deposit monies received bya broker or salesperson pursuant to this section is in dispute by the partiesto a real estate transaction, the broker or salesperson shall deposit themonies with the general treasurer within one hundred eighty (180) days of thedate of the original deposit, those monies to be held in trust by the generaltreasurer until the dispute is mediated, arbitrated, litigated, or otherwiseresolved by the parties. The parties to a real estate transaction may agree inwriting to extend the time period by which the monies must be deposited withthe general treasurer in accordance with regulations promulgated by thedepartment of business regulation.
(vi) The department of business regulation shall have theauthority to promulgate rules and regulations with respect to such escrowaccounts and the deposit of monies with the general treasurer.
(2) Escrow agents. Funds or deposits placed in escrowmay be held by any person or entity legally authorized to hold funds in thatcapacity, e.g., the real estate broker or attorney.
(b) Dual activities. In all real estate transactionsin which a broker holds more than one title, e.g., builder, contractor, orinsurance agent, all deposit monies received must be placed in the brokers realestate escrow account, unless there is a contractual agreement between theprincipals to the contrary.
(c) Unlawful appropriation. Pursuant to §11-41-11.1, any licensee to whom any money or other property is entrusted asescrow funds, who intentionally appropriates to the licensee's own use thatmoney or property, or transfers the funds from an escrow account to a companyor personal account prior to a closing, is guilty of unlawful appropriation.