The Real Estate Law that becomes effective January 1, 2017 contains a new escrow money requirement that imposes a burdensome duty on the real estate agent. SC Code Ann. §40-57-136(B)(4) holds:
“Trust funds received by a licensee in connection with a real estate transaction in which the licensee is engaged for the broker-in-charge . . . must be delivered to the broker-in-charge . . . no later than the following business day.” [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][emphasis added].
The agent has only one business day to deliver the money to her Broker-in-Charge. The agent may not wait until contract ratification to deliver the earnest money. In many larger metropolitan areas this will be difficult and time consuming. For example, if the client signs an offer late on Wednesday in Lexington and the Broker-in-Charge is located in Blythewood, the real estate agent would be required to deliver the earnest money to their BIC before close of business on Thursday. This holds true even though the offer may ultimately be rejected.
The statute does not provide direction to the licensee when the brokerage does not hold escrow. Since the statute does not say to deliver funds to the Broker-in-Charge only if the BIC is holding escrow, the plain meaning of the statute would mandate that all funds go to the BIC by the next business day regardless of who holds the earnest money.
The Broker-in-Charge requirements for depositing the earnest money did not change. Section 40-57-136 (D)(1)(a) states that trust funds received by a broker-in-charge in a real estate sales or exchange transaction must be deposited as follows in a separate real estate trust account:
“(i) cash or certified funds must be deposited within forty-eight hours of receipt, excluding Saturday, Sunday, and bank holidays;
(ii) checks must be deposited within forty-eight hours after written acceptance of an offer by the parties to the transaction, excluding Saturday, Sunday, and bank holidays.”
Many agents may be inclined to not include an earnest money deposit at the offer but rather complete the provision in the CCRA contract that allows additional earnest money to be delivered at a later date such as after ratification. While this tactic may eliminate the need to deliver funds by the next business day until after contract ratification, a real estate licensee could find themselves in serious legal trouble if they forget to later obtain the earnest money as set forth in the contract. Over the years several good real estate agents have been grieved for failing to get the earnest money as set forth in the contract. So be very careful.
Meet the People of Blair Cato: Carol Slice has been a real estate paralegal for 15 years. She is originally from Illinois and has lived in South Carolina since 2000. She is married and has two grown sons as well as two step-sons. She is the proud grandmother of a two-year-old grandson. She enjoys spending time with her family, friends and Boykin Spaniel. She also loves cooking, reading and spending time in the mountains. Carol is an avid Gamecock fan who lives in Chapin.