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Q: When does my client have to deposit the escrow funds? Also, when does the escrow agent have to deposit the funds in their escrow account?
A: The first question is simple. What does the contract say? Currently, all the major standard contracts in the commonwealth state that the purchaser/buyer has either deposited the funds with the escrow agent at ratification, or they will do so at a later date, usually a number of days. There are no additional number of days for the deposit, it must be done within the contracted date/days.
The second portion has more nuance. Who is holding the escrow funds? If it is a VREB licensee, then look no further than the regulations: 18VAC135-20-180. Maintenance and management of escrow accounts. The VREB licensee has until the end of 5 business banking days to deposit the funds. The regulation reads in relevant part:
[…] Upon the ratification of a contract, an earnest money deposit received by the principal broker or supervising broker or his associates that is to be held in the firm’s escrow account shall be placed in such escrow account by the end of the fifth business banking day following ratification, unless otherwise agreed to in writing by the principals to the transaction, and shall remain in that account until the transaction has been consummated or terminated.
Remember, this is just for VREB licensees. Other escrow agents (seller, attorney, lay settlement agent, etc.) are bound to other areas of law, or even no relevant laws, therefore, the contract controls. However, if the escrow agent is a VREB licensee, they must deposit it within 5 business banking days.
This does not give the purchaser/buyer an additional 5 business banking days. In other words, if the contract says that the purchaser/buyer must deposit the escrow funds within X days then they must deposit it within those X days, irrespective of what the duties of the escrow agent are.
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