Code of Virginia
Chapter 21 - Real Estate Brokers, Sales Persons and Rental Location Agents
§ 54.1-2108.1. Protection of escrow funds, etc., held by a real estate broker in the event of foreclosure of real property; required deposits

A. Notwithstanding any other provision of law:
1. If a licensed real estate broker or an agent of such licensee is holding escrow funds for the owner of real property and such property is foreclosed upon, the licensee or agent shall have the right to file an interpleader action pursuant to § 16.1-77.
2. If a single-family residential dwelling unit is foreclosed upon, and at the date of the foreclosure sale there is a real estate purchase contract to buy such property and such contract provides that the earnest money deposit held in escrow by a licensee shall be paid to a party to the contract in the event of a termination of the real estate purchase contract, the foreclosure shall be deemed a termination of the real estate purchase contract and the licensee or an agent of the licensee may, absent any default on the part of the purchaser, disburse the earnest money deposit to the purchaser pursuant to such provisions of the real estate purchase contract without further consent from, or notice to, the parties.
3. If a single-family residential dwelling unit is foreclosed upon and there is a tenant in the dwelling unit on the date of the foreclosure sale and the landlord is holding a security deposit of the tenant, the landlord shall handle the security deposit in accordance with applicable law, which requires the holder of the landlord's interest in the dwelling unit at the time of termination of tenancy to return any security deposit and any accrued interest that is duly owed to the tenant, whether or not such security deposit is transferred with the landlord's interest by law or equity, and regardless of any contractual agreements between the original landlord and his successors in interest. Nothing herein shall be construed to prevent the landlord from making lawful deductions from the security deposit in accordance with applicable law.
4. If a single-family residential dwelling unit is foreclosed upon pursuant to § 55.1-1237 and there is a tenant in such dwelling unit on the date of the foreclosure sale, the successor in interest who acquires the dwelling unit at the foreclosure sale shall assume such interest subject to the following:
a. If the successor in interest acquires the dwelling unit for the purpose of occupying such unit as his primary residence, the successor in interest shall provide written notice to the tenant, in accordance with the provisions of § 55.1-1202, notifying the tenant that the rental agreement is terminated and that the tenant must vacate the dwelling unit on a date not less than 90 days after the date of such written notice.
b. If the successor in interest acquires the dwelling unit for any other purpose, the successor in interest shall acquire the dwelling unit subject to the rental agreement and the tenant shall be permitted to occupy the dwelling unit for the remaining term of the lease, provided, however, that the successor in interest may terminate the rental agreement pursuant to § 55.1-1245 or the terms of the rental agreement. The successor in interest shall provide written notice of such termination to the tenant in accordance with the provisions of § 55.1-1202.
If rent is paid to a real estate licensee acting on behalf of the landlord as a managing agent, such property management agreement having been entered into prior to and in effect at the time of the foreclosure sale, the managing agent may collect the rent and shall place it into an escrow account by the end of the fifth business banking day following receipt.
5. If a single-family residential dwelling unit is foreclosed upon, and at the date of the foreclosure sale there is a written property management agreement between a landlord and a real estate licensee licensed pursuant to the provisions of § 54.1-2106.1, the foreclosure shall convert the property management agreement into a month-to-month agreement between the successor landlord and the real estate licensee acting as a managing agent, except in the event that the terms of the original property management agreement between the landlord and the real estate licensee acting as a managing agent require an earlier termination date. Unless altered by the parties, the terms of the original property management agreement that existed between the landlord and the real estate licensee acting as a managing agent shall govern the agreement between the successor landlord and the real estate licensee acting as a managing agent. The property management agreement may be terminated by either party upon provision of written notice to the other party at least 30 days prior to the intended termination date. Any funds received or held by the real estate licensee acting as a managing agent shall be disbursed only in accordance with the terms of the property management agreement or as otherwise provided by law.
B. Notwithstanding any other provision of law:
1. Any rent paid to a real estate licensee acting on behalf of a landlord client in connection with the lease shall be placed in an escrow account by the end of the fifth business banking day following receipt, regardless of when received, unless otherwise agreed to in writing by the principals to a lease transaction.
2. Any security deposits paid to a real estate licensee acting on behalf of a landlord client in connection with the lease shall be placed in an escrow account by the end of the fifth business banking day following receipt, unless otherwise agreed to in writing by the principals to a lease transaction.
3. Any application deposit as defined by § 55.1-1200 paid by a prospective tenant for the purpose of being considered as a tenant for a dwelling unit to a real estate licensee acting on behalf of a landlord client shall be placed in escrow by the end of the fifth business banking day following approval of the rental application by the landlord, unless otherwise agreed to in writing by the principals to a lease transaction.
4. Such funds shall remain in an escrow account until disbursed in accordance with the terms of the lease, the property management agreement, or the applicable statutory provisions, as applicable.
5. Except in the event of foreclosure, if a real estate licensee acting on behalf of a landlord client as a managing agent elects to terminate the property management agreement, the licensee may transfer any funds held in escrow by the licensee on behalf of the landlord client to the landlord client without his consent, provided that the real estate licensee provides written notice to each tenant that the funds have been so transferred. In the event of foreclosure, a real estate licensee shall not transfer any funds to a landlord client whose property has been foreclosed upon.
6. A real estate licensee acting on behalf of a landlord client as a managing agent who complies with the provisions of this section shall have immunity from any liability for such compliance, in the absence of gross negligence or intentional misconduct.
2010, c. 181; 2013, c. 489; 2017, cc. 67, 394; 2020, c. 1014; 2021, Sp. Sess. I, c. 426.

Structure Code of Virginia

Code of Virginia

Title 54.1 - Professions and Occupations

Chapter 21 - Real Estate Brokers, Sales Persons and Rental Location Agents

§ 54.1-2100. Definitions

§ 54.1-2101. Real estate salesperson defined

§ 54.1-2101.1. Preparation of real estate contracts by real estate licensees; translation

§ 54.1-2102. Repealed

§ 54.1-2103. Exemptions from chapter

§ 54.1-2104. Real Estate Board; membership; chairman; seal

§ 54.1-2105. General powers of Real Estate Board; regulations; educational and experience requirements for licensure

§ 54.1-2105.01. Educational requirements for all salespersons within one year of licensure

§ 54.1-2105.02. Regulation of real estate education providers and courses

§ 54.1-2105.03. Continuing education; relicensure of brokers and salespersons

§ 54.1-2105.04. Education requirements; reactivation of licenses; waiver

§ 54.1-2105.1. (Effective until January 1, 2023) Other powers and duties of the Real Estate Board

§ 54.1-2105.1. (Effective January 1, 2023) Other powers and duties of the Real Estate Board

§ 54.1-2105.2. Cease and desist orders for unlicensed activity; civil penalty

§ 54.1-2106. Repealed

§ 54.1-2106.1. Licenses required

§ 54.1-2106.2. Certification of audit on renewal of firm or sole proprietorship license

§ 54.1-2107. Certain action to constitute real estate broker or salesperson

§ 54.1-2108. Protection of escrow funds, etc., held by broker

§ 54.1-2108.1. Protection of escrow funds, etc., held by a real estate broker in the event of foreclosure of real property; required deposits

§ 54.1-2108.2. Protection of escrow funds, etc., held by a real estate broker in the event of termination of a real estate purchase contract

§ 54.1-2109. (Effective until January 1, 2023) Death or disability of a real estate broker

§ 54.1-2109. (Effective January 1, 2023) Death or disability of a real estate broker

§ 54.1-2110. Resident broker to maintain place of business in Virginia

§ 54.1-2110.1. Duties of supervising broker

§ 54.1-2111. Consent to suits and service of process by nonresidents; manner of service

§ 54.1-2111.1. Voluntary compliance program; real estate brokers

§ 54.1-2112. Definitions

§ 54.1-2113. Establishment and maintenance of fund, duty of Director, assessments of regulants

§ 54.1-2114. Recovery from fund generally

§ 54.1-2115. Investigations

§ 54.1-2116. Limitations upon recovery from fund; certain actions not a bar to recovery

§ 54.1-2117. Participation by Board in proceedings

§ 54.1-2118. Payment of claim; assignment of claimant's rights to Board

§ 54.1-2119. Revocation of license of regulant upon payment from fund

§ 54.1-2120. No waiver by Board of disciplinary action against regulant

§ 54.1-2130. Definitions

§ 54.1-2131. Licensees engaged by sellers

§ 54.1-2132. Licensees engaged by buyers

§ 54.1-2133. Licensees engaged by landlords to lease property

§ 54.1-2134. Licensees engaged by tenants

§ 54.1-2135. Licensees engaged to manage real estate

§ 54.1-2136. Preconditions to brokerage relationship

§ 54.1-2137. Commencement and termination of brokerage relationships

§ 54.1-2138. Disclosure of brokerage relationship in residential real estate transactions

§ 54.1-2138.1. Limited service agent in a residential real estate transaction, contract disclosure required

§ 54.1-2138.2. Duty to disclose ownership interest in specific real property

§ 54.1-2139. Disclosed dual agency and dual representation authorized in a residential real estate transaction

§ 54.1-2139.01. Disclosed dual agency and dual representation in commercial real estate transactions authorized

§ 54.1-2139.1. Designated standard agency or designated representation authorized in a residential real estate transaction

§ 54.1-2139.2. Repealed

§ 54.1-2140. Compensation shall not imply brokerage relationship

§ 54.1-2141. Brokerage relationship not created by using common source information company

§ 54.1-2142. Liability; knowledge not to be imputed

§ 54.1-2142.1. Liability for false information

§ 54.1-2143. Real estate board regulations to be consistent

§ 54.1-2144. Common law abrogated

§ 54.1-2145. Article does not limit antitrust laws

§ 54.1-2146. Licensee maintenance of records