Earnest money and other client funds must be deposited and held in a separate escrow/trust account, not commingled with the broker's operating funds.
Before you read
Test yourself first: 5 questions
Question 1 of 5
How must a Virginia broker handle earnest money and other client funds received in a transaction?
Answer: B. Virginia requires that escrow and client funds be held in a separate escrow/trust account and not commingled with the broker's own money.
Question 2 of 5
In Virginia, when a salesperson receives an earnest money deposit in connection with a purchase contract, to whom must the deposit be delivered?
Answer: B. A Virginia salesperson works under and is accountable to the principal broker. Funds belonging to others, such as earnest money deposits, must be turned over to the principal broker, who is responsible for depositing them into the firm's separate escrow/trust account. The salesperson may not hold client funds in a personal account.
Question 3 of 5
Under Virginia rules, a real estate firm's escrow account holding earnest money and other clients' funds must be:
Answer: B. Virginia requires that money held on behalf of others be maintained in a separate escrow or trust account that is distinct from the broker's operating and personal accounts. This separation is the core safeguard against commingling and conversion.
Question 4 of 5
A Virginia broker uses $500 of earnest money held in escrow to cover the firm's payroll, intending to replace it later. Regardless of intent to repay, this act is most accurately characterized as:
Answer: A. Using funds held in trust for the broker's own purposes is conversion, even if the broker intends to put the money back. It is a serious violation in Virginia and grounds for disciplinary action by the Real Estate Board. Commingling is merely mixing funds; conversion is actually using them.
Question 5 of 5
Whose responsibility is it under Virginia law to ensure that an affiliated salesperson's earnest money is deposited and maintained properly?
Answer: B. In Virginia the principal or supervising broker is responsible for handling escrow funds, which must be held in a separate escrow or trust account apart from the broker's operating funds. Commingling with personal or business funds is prohibited.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Virginia uses a buyer-beware (caveat emptor) disclosure model: the seller generally is not required to volunteer property defects.
- Sellers typically deliver a Residential Property Disclosure Statement directing buyers to investigate the property's condition themselves.
- Buyers are responsible for exercising due diligence (inspections, investigations) to discover the property's actual condition.
- Earnest money and other client funds must be deposited and held in a separate escrow/trust account, not commingled with the broker's operating funds.
- The principal broker is accountable for proper handling, recordkeeping, and prompt deposit of escrowed funds.
- Pre-license education: 60 hours; first-renewal post-license course: 30 hours.
- Salesperson must be affiliated with and supervised by a Virginia broker.
- Virginia is NOT a community-property state; marital property is handled under equitable distribution principles.
Virginia Disclosures, Escrow/Trust Funds & Key Numbers: FAQs
Is Virginia Disclosures, Escrow/Trust Funds & Key Numbers on the real estate exam?
Yes. State License Law is a scored domain on the Virginia real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Virginia test this differently?
Virginia applies its own license law on top of the national portion. This page covers the Virginia rules specifically, which is what the state section of your exam tests.
