When a transaction falls apart, what is the deadline for releasing the buyer’s deposit from a brokerage’s escrow account?
Release: Rhode Island law requires a real estate brokerage that is holding the deposit in an escrow account to release it within 10 days after the brokerage receives a mutual release that has been signed by all parties to the transaction.
Dispute: If the buyer(s) and seller(s) cannot agree, the brokerage must send the deposit to the State Treasurer’s Office within 180 days of the date of the original deposit. The funds will remain in the State Treasurer’s Office indefinitely until the buyers and sellers negotiate an agreement or one party obtains a court order.
Non-Responsive Buyer or Seller: If a buyer or seller will not respond, the brokerage that is holding escrow funds can make a “good faith determination” who is entitled to the deposit and send notice to the other party via certified mail. It is a good idea to send the notice by both certified and regular mail. The notice must state that the principal broker will release the funds to the other party unless the non-responsive party sends written notice disputing the release by one of the following deadlines.
Release to a Seller; 60 days after the seller receives written notice | Release to a Buyer: 21 days after the buyer receives written notice
For more information, contact the RIAR Legal Department at [email protected] or call 401-432-6945.