New York Real Estate Salesperson ExaminationBrokerage and Salesperson ResponsibilitiesHard
A real estate broker receives an earnest money deposit in the form of a personal check from a buyer. The check is for $7,500. According to New York law, what is the latest point by which this check must be deposited into the broker's escrow account?
- AWithin 24 hours of receipt.
- BWithin five calendar days of the contract being fully executed.
- CImmediately upon receipt, if the bank is open.
- DWithin three business days of receipt.
Show answer & explanationAnswer & explanation
Correct answer: D. Within three business days of receipt.
New York Real Property Law Section 441-c and 19 NYCRR Part 175.1 requires that all monies belonging to others, including earnest money deposits, received by a broker must be deposited into a separate bank account (escrow/trust account) within three business days of receipt. This rule applies regardless of the amount or the form of the deposit, whether cash or check.
Why the other options are wrong
- A. While prompt, 24 hours is not the exact legal requirement.
- B. The timeframe is based on receipt of funds, not contract execution.
- C. Though good practice, 'immediately' is not the precise legal timeframe.
NY Escrow Deposit Timeline
In New York, real estate brokers must deposit all funds belonging to others (e.g., earnest money) into a designated escrow account within three business days of receipt.
- Applies to all client funds.
- Mandated by NY Real Property Law.
- Ensures proper handling and security of funds.
Memory trick: Three Days To Deposit What's Not Yours.