Q. After closing the sale of a listed property, I transfer funds received in the transaction from my escrow account to my business account for final disbursement (e.g., to pay miscellaneous expenses for the buyer and seller such as recording fees, revenue stamps, survey, etc. Is this permissible?
No. All monies received by a real estate broker while acting in said capacity must be deposited into and disbursed directly from an escrow or trust account in accordance with the terms of the sales contract, lease, option, or other instrument. To temporarily transfer such money to a business or personal account for final disbursement would constitute a commingling of funds while such funds were on deposit in the broker's business account.
Many brokers appear to be operating under the misconception that upon tender of the deed and purchase price, the transaction is "closed"; that funds received by the broker during the transaction which are on deposit in the broker's escrow account should thereafter cease to be considered trust funds; and that the broker should treat this money as non-trust funds by transferring the funds (in one check) to his/her business account for final disbursement. In fact, however, the transaction has not been consummated or "closed" until all terms and conditions of the agreement have been satisfied and all moneys received by the broker in the transaction have been disbursed to the persons entitled thereto in accordance with the provisions of such agreement. A complete detailed closing statement showing all of these receipts and disbursements must then be furnished to the buyer and seller or within five days of the closing (G.S. 93A-6(a) (14), Licensing Board Rule .0107(b)).
The fact that such funds remain in the broker's business account for only a very brief period of time is of no consequence. For example, should the broker become involved in legal action or should he become incapacitated or die while such funds are on deposit in his business account, these trust funds may be "frozen" notwithstanding the fact that they were only to remain there temporarily,
It should be remembered, however, that earned commissions and other brokerage fees must be promptly disbursed from the escrow account as with any other expense of the sale. To allow such commissions to remain and accumulate indefinitely in the escrow account would cause a commingling of funds similar to that which would occur when non-trust funds are deposited into a trust account.
Simply stated: Never commingle the money of your principals with your own business or personal money.