25-Jan-2008

Section 62-12-321 of the Tennessee Real Estate Brokers' Act requires every broker to keep an escrow or trustee account of funds deposited with the broker that are related to real estate transactions.

This Section of the Act also requires brokers to maintain accurate records of such accounts for a period of at least three years. These records must contain the following information: (1) the depositor of the funds; (2) the date of the deposit; (3) the date of the withdrawal; (4) the payee / recipient of the funds; and (5) such other pertinent information as TREC may require.

Please note that your errors and omissions or other professional liability insurance policies may require or recommend that escrow records be kept for a longer period of time.

TREC Rule 1260-2-.09 (Deposits and Earnest Money) further explains a broker's duties with regard to escrow accounts. This Rule requires brokers to maintain a separate escrow account for the purpose of holding any funds (typically deposits and earnest money) that may be received in his/her fiduciary capacity.

Although such funds may actually be held by another person or firm, brokers are still responsible at all times for such funds accepted by them or their affiliate brokers. This Rule also requires an affiliate broker to turn over to his/her broker all deposits and earnest money immediately upon receipt.