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Q: “In a residential purchase transaction, the parties may agree to set money aside in escrow for repairs or other issues after closing. Sometimes one of the brokers will hold this money in the broker’s escrow account. However, when looking at the Virginia Code sections pertaining to real estate broker escrow accounts, the Code only references holding earnest money deposits, rents, and security deposits. Are brokers allowed to hold other types of money in escrow, such as money for repairs after closing?”

A: Yes. While Virginia Code sections 54.1-2108–2108.2 do not expressly reference other types of money held in escrow, the Code does not prohibit it. Furthermore, The Virginia Real Estate Board Regulations provide further guidance.  

The Regulations contemplate additional types of monies that may be held in escrow, including “money advanced by a buyer or seller for the payment of expenses with the closing of real estate transactions, money advanced by the broker’s client or expended on behalf of the client, or other escrow funds received by the broker or his associates on behalf of his client or any other person . . . .” (18VAC135-20-180.A.1.)  

Neither the Code nor the Regulations, however, state how such funds are to be deposited or disbursed. Therefore, it would be a best practice for brokers to only follow the written instructions of the principals to the transaction regarding the holding and disbursement of such funds in escrow.   

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