closing

escrow

Escrow is an arrangement in which a neutral third party, the escrow agent, holds money, documents, and instructions on behalf of the buyer and seller until all conditions of the transaction are met. The agent then delivers the deed to the buyer and the funds to the seller and other parties according to the instructions. Whether closings are handled through escrow agents or attorneys varies by state and region.

Exam tip: The escrow agent is neutral and follows written instructions; it does not represent either party. "Closing in escrow" differs from a face-to-face closing.
Example: The buyer deposits $80,000 and the seller deposits a signed deed with a title company; once the loan funds and title is clear, the escrow agent records the deed and pays the seller.

1. A broker's commission on a closed sale was deposited into the trust account with the escrow funds. What should the broker do with the earned commission?

Answer & explanation

Answer: A. Earned commissions become broker funds, and leaving them in the trust account beyond the allowed period is commingling. Keeping them there as a cushion is the tempting but improper practice.

Related terms & state variants

closing earnest money escrow agent settlement

Sources

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Last verified: 2026-10-23