                                 CODE OF VIRGINIA

PROTECTION OF ESCROW FUNDS, ETC., HELD BY A REAL ESTATE BROKER IN THE EVENT OF
TERMINATION OF A REAL ESTATE PURCHASE CONTRACT (§ 54.1-2108.2)

Notwithstanding any other provision of law, for purchase transactions:

1. Upon the ratification of a contract, an earnest money deposit received by the
principal broker or supervising broker, or an agent of such principal broker or
supervising broker, that is to be held in the firm&#8217;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.

2. If a principal broker or supervising broker, or an agent of such principal
broker or supervising broker, receives an earnest money deposit that will not be
held in the firm&#8217;s escrow account, the principal broker or supervising
broker shall ensure that the earnest money deposit is delivered to the escrow
agent named in the contract by the end of the fifth business banking day
following receipt of the deposit, unless otherwise agreed to in writing by the
principals to the transaction.

3. In the event that the transaction is not consummated, the principal broker or
supervising broker shall hold such funds in escrow until (i) all principals to
the transaction have agreed in a written agreement as to their disposition, upon
which the funds shall be returned to the agreed-upon principal as provided in
such written agreement; (ii) a court of competent jurisdiction orders such
disbursement of the funds; (iii) the funds are successfully interpleaded into a
court of competent jurisdiction pursuant to this section; or (iv) the broker
releases the funds to the principal to the transaction who is entitled to
receive them in accordance with the clear and explicit terms of the contract
that established the earnest money deposit.
			At the option of a broker, written notice may be sent by the broker that
release of such funds shall be made unless a written protest is received from
the principal who is not receiving the funds by such broker within 15 calendar
days of the date of such notice. Notice of a disbursement shall be given to the
parties to the transaction in accordance with the contract, but if the contract
does not specify a method of delivery, one of the following methods complies
with this section: (a) hand delivery; (b) United States mail, postage prepaid,
provided that the sender retains sufficient proof of mailing, which may be
either a United States postal certificate of mailing or a certificate of service
prepared by the sender confirming such mailing; (c) electronic means, provided
that the sender retains sufficient proof of the electronic delivery, which may
be an electronic receipt of delivery, a confirmation that the notice was sent by
facsimile, or a certificate of service prepared by the sender confirming the
electronic delivery; or (d) overnight delivery using a commercial service or the
United States Postal Service. Except as provided in the clear and explicit terms
of the contract, no broker shall be required to make a determination as to the
party entitled to receive the earnest money deposit. A broker who complies with
this section shall be immune from liability to any of the parties to the
contract.

4. A principal broker or supervising broker holding escrow funds for a principal
to the transaction may seek to have a court of competent jurisdiction take
custody of disputed or unclaimed escrow funds via an interpleader action
pursuant to &#xA7; 16.1-77.

5. If a principal broker or supervising broker is holding escrow funds for the
owner of real property and such property is foreclosed upon by a lender, the
principal broker or supervising broker shall have the right to file an
interpleader action pursuant to &#xA7; 16.1-77 and otherwise comply with the
provisions of &#xA7; 54.1-2108.1.

HISTORY: 2018, cc. 60, 86; 2019, cc. 179, 395; 2022, c. 380.