Q: When a Texas licensed broker receives earnest money, how long does the broker have to deposit the funds into a trust account or deliver the funds to an escrow agent?
A: In accordance with TREC Rule 535.146(b)(3), the broker must deposit any trust funds, including earnest money, that it receives into a trust account, or deliver the trust funds to an authorized escrow agent, such as a title company, no later than the close of business of the second (2nd) working day after the date the broker receives the funds. The principals to the transaction have the right to agree in writing to a different deadline for the deposit. The consensus of opinion is that a buyer under a TREC contract has a reasonable amount of time to deliver the earnest money once the contract has been executed, depending on the facts and circumstances of the particular transaction. The consensus of opinion on the length of time for the buyer’s deposit of the earnest money is based on the fact that the performance obligations in the contract are not tied to a time is of the essence requirement.