Delivery of Earnest Money Deposit More Than 3 Days Following Contract

QUESTION: I just received an offer on one of my listings. The offer is on the Offer to Purchase and Contract (form 2-T). The offer designates my firm as the escrow agent but no earnest money was received with the offer. Instead, the buyer checked the box indicating that the initial earnest money deposit will be delivered within five days of the Effective Date of the Contract in the form of a personal check. If the seller accepts the offer and funds are not received for five days, will I be in violation of the Real Estate Commission Rule that requires all earnest money deposits to be deposited into a trust or escrow account not later than three banking days after acceptance?

ANSWER: No. The rule you are referring to regulates the handling and accounting of funds once they are received by the brokerage. The applicable rule is Rule A.0116(b)(3) which can be found in Subchapter 58A of the North Carolina Administrative Code. The rule provides: “Earnest money or tenant security deposits paid by means other than currency and received by a broker in connection with a pending offer to purchase or lease shall be deposited in a trust or escrow account no later than three days following acceptance of such offer to purchase or lease; the date of such acceptance of such offer or lease shall be set forth in the purchase or lease agreement.”

The quoted language permits a broker acting as an escrow agent to hold an earnest money check without depositing it until such time as a contract has been signed by both buyer and seller. Once a contract is signed, any check received by the broker must be deposited within three banking days after acceptance. However, where the Contract permits the buyer to deliver his earnest money check five days after the effective date of the Contract, the escrow agent would still have three banking days from receipt of that check to deposit the check in his or her trust or escrow account.