A recent sales contract provided for the buyer's deposit check to be deposited to the escrow holder's account within 3 days of ratifying the contract. The third day after ratification happened to be on a Monday. By Thursday that week I still did not have a receipt from the title company handling the escrow for the deposit, so I phoned to ask them to send one for my file. Much to my surprise, they did not have the deposit. I called the buyer's agent to find out what was going on and she said the buyer decided to use a different account ,so she had returned the original deposit check to the buyer and she would get the replacement in "by the end of the week." My response: Not good enough.

When a client hands their agent a deposit check, they are entrusting the agent to handle it appropriately. They are "trust funds."  There are very strict rules about handling trust funds and there is absolutely no excuse for not knowing this, because every agent in California is required to complete a refresher course on "Trust Fund Handling" every 4 years. Failure to handle trust funds correctly is one of the leading reasons for agents to lose their license. Just because the buyer wanted to replace the check with a different one does not suspend the contractual obligation to get the deposit check (either the original check or a substitute check) into escrow within the time frame specified in the contract. This agent was completely unaware of her responsibilities or the seriousness of the matter.

In this case the agent listened to what I was saying and hand delivered the check to the escrow holder by late Thursday afternoon. No harm done in this case, but there could have been serious issues if the buyer had decided to back out of the contract, for example. With no deposit, how would the seller be able to claim damages? This is the stuff that lawsuits are made of, and everybody knows how quickly almost any little thing in California can escalate into a lawsuit. For heaven's sake agents, remember that this is not a parlor game we are playing. Our responsibilites as agents are serious and the potential consequences for negligence of this sort can be enormous.