Pennsylvania Real Estate Escrow Rules: Who Holds the Deposit, the Next-Business-Day Deadline, and Disputes

Short answer: In Pennsylvania the broker, not a salesperson, holds deposits and other escrows, unless the parties agree in writing to another holder. A salesperson or associate broker who receives a deposit must promptly pay it over to the employing broker. The broker must deposit money belonging to others into a separate escrow (custodial or trust fund) account by the end of the next business day after receiving it, may not commingle it with the broker's own funds, and must hold it until the transaction closes, it ends without a dispute (or with a prior written agreement covering a dispute), all parties sign written release instructions, or a final court order directs its release. These rules come from section 608.5 of the Real Estate Licensing and Registration Act (RELRA) and 49 Pa. Code sections 35.321-35.328.

Who holds the deposit

• The salesperson pays the funds over to the employing broker promptly after receiving them. A salesperson, associate broker or qualified association may not hold deposits or other escrows.
• The broker deposits and holds the money. If the broker is a partnership, association or corporation, the broker of record is responsible for making sure the escrow duty is performed.
• Someone else may hold the deposit only if the parties agree in writing or electronic form to have a person other than the brokers hold it.

The escrow duty cannot be waived or changed by agreement between the parties, between the broker and the parties, or between brokers.

The deposit deadline and the check exception

Under section 35.324, a broker must deposit money belonging to another into an escrow account by the end of the next business day after it is received in the real estate office where the escrow records are kept.

There is one exception for checks. If the deposit comes with an offer to buy or lease and is in the form of a check, the broker may hold the check uncashed pending acceptance, but only with the written (or, under RELRA section 608.5(f), electronic) permission of both the buyer and seller (or lessee and lessor). If the offer is accepted, the broker deposits the check within 1 business day of acceptance. If it is not accepted, the broker promptly returns the check uncashed.

Which broker holds it in a cobrokerage deal

If the buyer gives the deposit to the listing broker, the listing broker holds it. If the buyer gives it to the selling broker with prior notice that it will go to the listing broker (which the buyer acknowledges in writing before signing the agreement of sale), the listing broker assumes the escrow duty. Without that notice, the selling broker keeps the escrow duty (section 35.323).

The escrow account and commingling

An escrow account must be maintained in a federally or state-insured bank or recognized depository, designate the broker as trustee, allow withdrawal without prior notice, and be used exclusively for escrow purposes. The broker may not commingle escrow money, or interest earned on it, with business, personal or other funds, and may not misappropriate it. The only permitted exception is that the broker may put business or personal funds into the account to cover bank service charges or a required minimum balance.

Two related rules show up on exams:

• A broker does not have to hold in escrow rents received as a property manager, but those rents go into a rental management account that is separate from the escrow account and the general business account.
• If money will be held for more than 6 months, the broker is encouraged to use an interest-bearing escrow account. Interest follows the principal unless the parties agree otherwise, and the broker may not claim it (except as a lessor under the Landlord and Tenant Act).

When the money can be released

RELRA section 608.5(a) says the broker retains the deposit pending one of these events:

1. consummation (closing) of the transaction;
2. termination before closing where there is no dispute about who is entitled to the deposit, or where a prior written or electronic agreement covers what happens in a dispute;
3. written or electronic release instructions signed by all parties to the transaction;
4. a court order specifying disposition that has become final and is not subject to appeal.

The broker must account for the full amount. If only part is released, the broker gives written or electronic notice to all parties of the amounts released, who received them, and what is still held.

When the parties disagree

If the parties dispute who is entitled to escrowed money, the broker keeps it in escrow until the dispute is resolved. If resolution looks remote without legal action, the broker may, after 30 days' notice to the parties, petition the county court to interplead the rival claimants (section 35.327).

Escrow records

The broker keeps records showing who paid the money, whom it belongs to, for whose account it is deposited, and the dates it was received, deposited and withdrawn. The Commission may inspect the records and funds upon proper demand or notice. Failing to comply with any requirement of RELRA section 608.5 is a ground for suspension or revocation of a license under section 604(a)(5.1).

On the exam

Escrow is part of "Funds and accounts" in the Regulations Governing the Activities of Licensees area, which carries 11 of the 40 scored State items in the Pearson outline effective March 16, 2026. Expect timing questions (next business day, 1 business day after acceptance), who holds the deposit, the four release events and the 30-day interpleader notice. Study more in Pennsylvania licensee conduct, read the Consumer Notice guide, or browse all Pennsylvania lessons.

Independent exam-prep guide. Not affiliated with the Pennsylvania State Real Estate Commission, the Department of State or Pearson VUE. Always confirm current requirements with the Commission.