License Law
A neutral third-party arrangement where funds or documents are held until conditions of a real estate transaction are met.
Escrow is a legal arrangement in which a third party temporarily holds money, property, or a deed until a particular condition is met. In real estate, earnest money is typically held in an escrow account during the transaction period. In New York, brokers are required to deposit client funds into a separate escrow or trust account. Never their personal or business accounts. Mixing client funds with personal funds is called commingling and is a license law violation.
Exam Tip
The broker holds escrow funds in trust. They never become the broker's money until the transaction closes.
Study Guide
License Law
Key concepts and exam tips →
Practice
NY Real Estate License Law
Free sample questions →
Preparing for the NY Real Estate Exam?
Unlocked covers Escrow and every other concept on the NY Real Estate Salesperson Exam — with study modules, practice questions, spaced-repetition flashcards, and Carl, your AI study buddy.
click for a haiku!