The correct and ethical management of escrow funds is essential to ensure clean transactions and protect the interests of all parties involved. Brokers have the responsibility to follow certain rules and regulations in the management of these funds.

The Ronald the Broker Scenario

Donald is a real estate broker who, in the process of managing escrow funds for a transaction, performs several actions. Of the following, which could lead to possible disciplinary action for Ronald?

• Expect all necessary people to sign an escrow instruction before giving them a copy of the instruction.
• Show the escrow records to the Commissioner before the escrow has closed.
• Follow the seller's written instructions to record the transfer of title to the buyer.
• Makes a small change to the escrow instructions at the seller's request.

Correct Answer and Analysis

The correct answer is Make a small change to the escrow instructions at the seller's request. Under CCR 2950(b), the broker must not make or allow to be made any alterations to escrow instructions unless the signatories authorize the changes by signature or initial. This act may result in a disciplinary sanction for the broker.

The other options mentioned are actions that the broker should perform: allow the Commissioner to examine escrow records, ensure that all signatures are on the document before distributing copies, and follow the written instructions of the principal. It is important to note that the registration of the title is not an action of the broker acting as an escrow agent, but rather as the seller's agent.

Conclusion

Integrity and professional ethics are essential in the management of escrow funds. Brokers must be knowledgeable and cautious in following all relevant regulations to ensure successful transactions and maintain the trust of their clients.