Under Massachusetts law, a broker must hold all deposit money in a designated escrow or trust account. These funds are held in trust for the parties to the transaction and cannot be withdrawn until the transaction is either consummated (closed) or terminated according to the terms of the contract. Upon consummation, the broker disburses the funds as directed by the purchase and sale agreement and the closing statement. Withdrawing funds for the broker's personal or business use, or at the direction of only one party without the consent of the other (absent a court order), is a breach of fiduciary duty and an illegal act of commingling or conversion.

A. An attorney's order is insufficient. A broker can only release funds upon mutual agreement of the parties, a court order, or as specified in the contract.

B. Using escrow funds for business expenses is illegal commingling and conversion, a serious violation of licensing law.

C. The broker's commission is paid from the escrow funds at closing, but it cannot be withdrawn before the transaction is fully consummated.

1. Code of Massachusetts Regulations (CMR), 254 CMR 3.00: Professional Standards of Practice, Section (10)(b) and (d).

Section (10)(b) states: "A broker shall not commingle the money or other property of the principal with the broker's own." This directly prohibits using escrow funds for advertising (B) or the broker's commission before it is properly disbursed (C).

Section (10)(d) outlines the conditions for releasing a deposit in a non-consummated transaction, implying that disbursement in a consummated transaction proceeds as agreed upon at closing.

2. Massachusetts General Laws (MGL), Chapter 112, Section 87AAA(d).

This statute grants the Board of Registration of Real Estate Brokers and Salespersons the power to suspend or revoke a license for "failing, within a reasonable time, to account for or remit any moneys coming into his possession which belong to others," which underscores the strict rules for handling escrow funds.

3. Jennings, M. M. (2017). Real Estate Law (11th ed.). Cengage Learning. Chapter 8, "Real Estate Brokerage and Management," pp. 218-220.

This university-level textbook explains the broker's fiduciary duty regarding client funds, noting that "Commingling, the mixing of client funds with the broker's personal or business funds, is prohibited... The funds are disbursed at closing according to the terms of the sales contract." This general principle is foundational to Massachusetts-specific regulations.