Key Takeaways
- Pennsylvania brokers must maintain escrow accounts in federally insured institutions
- Deposits must be delivered to the broker by the end of the next business day
- Commingling of escrow funds with personal or business funds is prohibited
- Escrow accounts must be reconciled regularly with proper record keeping
- Records must be retained for 3 years and be available for SREC inspection
Last updated: January 2026
Pennsylvania Escrow and Trust Account Requirements
Proper handling of client funds is one of the most important responsibilities of a Pennsylvania broker.
Escrow Account Basics
Account Requirements
Pennsylvania brokers must:
| Requirement | Specification |
|---|---|
| Account Type | Escrow or trust account |
| Institution | Federally insured bank or savings institution |
| Account Name | Must identify as escrow/trust |
| Location | Pennsylvania institution (typically) |
| Signatory | Broker or authorized party |
Types of Funds in Escrow
| Fund Type | Description |
|---|---|
| Hand money | Deposits on purchase contracts |
| Security deposits | Rental property deposits |
| Rent collections | Property management receipts |
| Other client funds | Any funds held for others |
Deposit Requirements
Timing
Deposits must be handled promptly:
| Step | Timeframe |
|---|---|
| Salesperson to broker | By end of next business day |
| Broker to escrow | As specified in agreement |
Holding Options
Pennsylvania allows deposits to be held by:
- Broker's escrow account
- Title company
- Attorney's escrow account
- Other as specified in agreement
Best Practice: Clearly specify in the contract where deposits will be held.
Prohibited Practices
Commingling
Commingling is mixing escrow funds with personal or business funds:
| Prohibited | Permitted |
|---|---|
| Deposit personal funds in escrow | Minimal amount for bank fees |
| Use escrow funds for business | Separate operating account |
| Transfer without authorization | Authorized disbursements |
Conversion
Conversion is using escrow funds for personal purposes:
- Criminal offense
- Grounds for license revocation
- May result in prosecution
Premature Disbursement
Cannot disburse escrow funds until:
- Transaction closes, OR
- Written agreement of all parties, OR
- Court order
Escrow Account Maintenance
Reconciliation
| Requirement | Frequency |
|---|---|
| Bank statement reconciliation | Monthly minimum |
| Trial balance | Regularly |
| Resolution of discrepancies | Immediately |
Record Keeping
Required records include:
- Bank statements
- Deposit records
- Check register/ledger
- Transaction documentation
- Reconciliation reports
Retention Period: 3 years minimum
SREC Access
SREC may:
- Audit escrow accounts
- Inspect records
- Request documentation
- Take action for violations
Interest on Escrow Accounts
Interest-Bearing Accounts
If escrow funds are placed in interest-bearing accounts:
- Must have written agreement from all parties
- Agreement specifies who receives interest
- Proper accounting required
- Typically for large or long-held deposits
When Interest May Apply
| Situation | Interest Consideration |
|---|---|
| Short-term deposits | Usually non-interest bearing |
| Large deposits | May be interest-bearing with agreement |
| Long-term holds | Consider interest-bearing |
| Security deposits | May have specific requirements |
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Test Your Knowledge
How long must Pennsylvania brokers retain escrow account records?
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Test Your Knowledge
By when must a Pennsylvania salesperson deliver a deposit to their broker?
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