Real Estate Licensing RePA_Sales_S Exam - Topic 5 Question 11 Discussion

Under 49 Pa. Code 35.326 (Escrow Accounts and Interest), interest earned on escrow accounts belongs to the party or parties as determined by the terms of the contract or agreement.

A broker cannot personally benefit from interest earned on escrow funds unless the contract explicitly allows it.

The purchase agreement must specify how the interest is handled, whether it is payable to the buyer, seller, or split between parties.

Why the other answers are incorrect:

Option A (Payable to the Broker): A broker cannot keep interest from an escrow account unless agreed upon in writing.

Option B (Equally Divided Between Buyer and Seller): Interest division is not automatic; it must be outlined in the contract.

Option C (Equally Divided Between Brokers): Brokers do not have rights to escrow interest unless explicitly agreed upon.

49 Pa. Code 35.326 -- Escrow Accounts and Interest