Current through Rules and Regulations filed through March 20, 2024
(1)
The Designated Trust or Escrow
Account.
(a) Brokers may maintain more
than one designated trust or escrow account. Brokers shall notify the
Commission of the name of the financial institution in which each account is
maintained and each account's name or number within one month of opening each
account.
(b) A licensee shall place
all cash, checks, or other items of value received by the licensee in a
brokerage capacity into the custody of the broker holding the licensee's
license as soon after receipt as is practicably possible.
(c) A licensee shall place all cash, checks,
or other items of value received by the licensee when the licensee is acting in
the capacity of principal in the sale of interests in real estate owned by such
licensee and all security deposits received on property owned by the licensee
into the custody of the broker holding the licensee's license or in a trust
account approved by that broker as soon after receipt as is practicably
possible.
(d) Unless otherwise
agreed to in writing by the party or parties at interest, the broker holding
such cash or checks shall promptly deposit said funds in a federally insured
account designated by the financial institution as a trust account and
registered with the Commission and shall make appropriate arrangement for the
safekeeping of any items of value received other than cash or checks. If the
broker elects to deposit any funds into an interest-bearing trust account, the
broker shall obtain the written agreement of the parties indicating to whom the
broker shall pay any interest earned on trust funds deposited into that
interest-bearing account prior to depositing those funds into such an account.
See also O.C.G.A. §§
43-40-2,
43-40-20,
43-40-21, &
43-40-25.
(e) A broker may maintain the broker's own
funds in a designated trust or escrow account only when they are clearly
identified as the broker's deposit and only for the following purposes:
1. If the financial institution in which the
account is maintained designates a specific minimum balance that must be
maintained in order to keep the account open, the broker may maintain that
amount in the account designated as the broker's funds.
2. If the financial institution in which the
account is maintained requires a service charge be paid for the account, the
broker may maintain in the account in the broker's name a reasonable amount to
cover that service charge. The broker may also maintain in the account in the
broker's name a reasonable amount sufficient to cover other occasional
financial institution charges and costs of maintaining the account including
but not limited to charges for blank checks and deposit slips and fees for
return of deposited checks which fail to clear.
3. A broker may allow commissions due the
broker that are being paid from funds of others held in the broker's designated
trust or escrow account to remain in the account provided that:
(i) the broker's accounting system for trust
or escrow accounts designates those commissions as the broker's funds and
properly accounts for them and
(ii)
each month the broker removes from the account any of the broker's funds that
exceed the minimum necessary to comply with subparagraph (a) or (b)
above.
4. Only checks
made payable to the broker may be used to withdraw monies designated as the
broker's funds from the designated trust or escrow account.
(2)
Accounting
Requirements.
(a) Every broker
required by O.C.G.A. Section
43-40-22 to maintain a trust or
escrow account shall maintain an accounting system in which each trust or
escrow deposit is detailed in the following manner:
1. Names of buyer and seller or tenant and
landlord or member and community association or broker.
2. Amount and date of deposit.
3. Identification of property
involved.
4. The amount, payee and
date of each check drawn on the escrow account in connection with that
deposit.
(b) Licensees
may meet the accounting requirements of this or any other Commission rule with
either manual or electronic accounting systems as the efficiency of the firm's
business operations dictate. However, whether a manual or electronic, the
accounting system must:
1. include all the
components required by law and sound business practices,
2. be readily accessible,
3. be in a readily understandable format,
and
4. be reasonably available to
any authorized representative of the Commission.
(3) Disbursements.
(a) A broker who disburses trust funds from
the broker's designated trust or escrow account contrary to the terms of a
contract for the sale or rental of real estate, or other contract creating the
escrow, or who fails to disburse trust funds according to the terms of any
contract creating the escrow, will be considered by the Commission to have
demonstrated incompetence to act as a real estate broker in such manner as to
safeguard the interest of the public.
(b) A broker who disburses trust funds from a
designated trust account under the following circumstances shall be deemed by
the Commission to have fulfilled properly the broker's duty to account for and
remit money which the broker is required to maintain and deposit in a
designated trust account:
1. upon the
rejection of an offer to buy, sell, rent, lease, exchange, or option real
estate;
2. upon the withdrawal of
an offer not yet accepted to buy, sell, rent, lease, exchange, or option real
estate;
3. at the closing of the
transaction;
4. upon securing a
written agreement which is signed by all parties having an interest in the
trust funds and is separate from the contract which directs the broker to hold
the funds;
5. upon the filing of an
interpleader action in a court of competent jurisdiction;
6. upon the order of a court of competent
jurisdiction; or
7. upon a
reasonable interpretation of the contract which directed the broker to deposit
the funds.
(c) A broker
shall not disburse funds from a designated trust account as provided in
paragraph (b) until the broker has reasonable assurance that the financial
institution has credited the funds to the broker's trust account. When a broker
makes a disbursal to which all parties to the contract do not expressly agree,
the broker must immediately notify all parties in writing of the
disbursal.
(d) A broker who claims
any part of the earnest money or other money paid to the broker in connection
with any real estate transaction as part or all of the broker's commission or
fee shall be deemed by the Commission to have complied with O.C.G.A. Section
43-40-20(e)if:
1. in a sales transaction, the transaction
has closed or the date of closing specified in the sales agreement and any
extensions of that date have passed;
2. in a lease or rental transaction,
possession has been delivered to the tenant;
3. in a lease/purchase transaction, the sales
transaction has closed or the date of closing specified in the sales agreement
and any extensions thereof have passed; or 4. the broker has secured a written
agreement, separate from the sales contract or lease agreement, signed by all
parties having an interest in the transaction who have agreed that the broker
is entitled to any commission.
(e) All refunds of earnest money must be paid
by check or credited at the closing of a transaction.
See also O.C.G.A. §§
43-40-2,
43-40-20,
43-40-21, &
43-40-25.
(f) The total of all checks written against
each deposit should reflect a zero balance in the designated escrow or trust
account relating to the closing of each individual transaction except when a
portion of the deposit is transferred to the broker's name for the purpose of
satisfying a commission. When such a transfer is made, the total of that
transfer and all checks written against that deposit should reflect a zero
balance.
(g) If a licensee who owns
a designated trust account files a bankruptcy petition, such licensee shall
immediately notify the Commission in writing of the filing of that petition. If
a qualifying broker or the firm that a licensee serves as qualifying broker
files a bankruptcy petition, such qualifying broker shall immediately notify
the Commission in writing of the filing of that petition.
See also O.C.G.A. §§
43-40-2,
43-40-7, &
43-40-25.
(4)
Trust Accounts for Property
Management or Association Management. Brokers who manage real property
or community associations may maintain designated rental or assessment trust or
escrow accounts separate from their other trust or escrow accounts.
(a) In paying bills on behalf of an owner or
an association from any designated rental or assessment escrow or trust
account, there must be enough money credited and deposited to the owner's or
the association's account to cover said bill.
(b) Security deposits, if kept in a
designated rental trust or escrow account, must be clearly identified and
credited to the tenant and there must always be a balance in the account equal
to the total of said security deposits.
(c) A licensee who manages rental property
which the licensee owns must maintain any security deposits collected in a
designated trust account and may not post a bond in lieu of maintaining such
security deposits in a designated trust account.
(5)
Examination of Trust Accounts by
the Commission. O.C.G.A. Section
43-40-20provides that each broker
required to maintain a designated trust or escrow account shall authorize the
Commission to have that designated trust or escrow account(s) examined by a
duly authorized representative of the Commission during each renewal period or
at such other time as the Commission may direct upon reasonable cause.
(a) With regard to the members of the
Commission who are required to maintain such designated trust accounts, this
examination may be done either:
1. by the
Commission member's engaging and paying a Certified Public Accountant to
examine the broker's designated trust account or accounts to determine that
that account is maintained in accordance with this rule and any other
applicable rules, regulations, or statutes; or
2. by the Real Estate Commissioner's engaging
the services of an independent accountant to examine a member's designated
trust account or accounts to determine that the account is maintained in
accordance with this rule and any other applicable rules, regulations, or
statutes.
(b) Upon being
contacted by the Commission's staff for purposes of conducting an examination
of a trust account or accounts, a broker may elect to provide the Commission
with a report on the broker's designated trust account(s) from a Certified
Public Accountant in lieu of an examination by a duly authorized representative
of the Commission. The Commission, in its discretion, may elect not to accept
such a report and conduct its own examination. The report of the Certified
Public Accountant must take the following form:
__________________________
(Date)
I, ________, a Certified Public Accountant, have this date
examined the real estate brokerage trust accounts of ___________ for the time
period of ________ to __________ and find the handling of funds in these
accounts to be in compliance with O.C.G.A. Sections
43-40-20 and
43-40-25(a)(3),(4),(5),
and (23) and Rules
520-1-.26,
520-1-.30, and
520-1-.34 of the Georgia Real Estate
Commission. (Attach a statement explaining items, if any, which do not appear
to be in compliance.) Said firm maintains the following real estate brokerage
trust accounts:
(list account numbers and financial institution names)
Certificate Number Signature of Certified Public
Accountant
Affirmed by Broker
(c) Copies of accounting system entries for
trust or escrow accounts, financial institution deposits, financial institution
statements, receipts and other documents related to designated trust or escrow
accounts shall be made available to authorized agents of the Commission upon
reasonable request and at a reasonable cost to the Commission.
(6)
Monthly Reconciliation
of Trust Accounts. A broker required to maintain a trust or escrow
account shall cause to be made, at least monthly, a written reconciliation
statement comparing the broker's total trust liability with the reconciled
financial institution balance(s) of the broker's trust account(s). The broker's
trust liability is the sum total of all deposits received, required by contract
to deposit, and being held by the broker at any point in time.
(a) The minimum information to be included in
the monthly reconciliation statement shall be the date the reconciliation was
undertaken, the date used to reconcile the balances, the name of the financial
institution(s), the name(s) of the account(s), the account number(s), the
account balance(s) and date(s), any deposit(s) in transit, the amounts of any
outstanding check(s) identified by date and check number, an itemization of the
broker's outstanding trust liability showing the amount and source of funds
received and not yet disbursed, and other items necessary to reconcile the
financial institution account balance(s) with the balance in the broker's
checkbook(s) and with the amount of the broker's trust liability. The broker
shall review the monthly reconciliation statement and maintain copies in the
broker's files for a period of three years.
(b) Whenever the trust liability and the
financial institution balances do not agree, the reconciliation statement shall
contain a description or explanation for the difference(s) and any corrective
action(s) taken with reference to shortages or overages of funds in the
account(s). Whenever a trust financial institution account record reflects a
service charge or fee for a non-sufficient check being returned or whenever an
account has a negative balance, the reconciliation statement shall disclose the
cause(s) of the returned check or negative balance and the corrective action(s)
taken.
(7)
Renewal
Trust Account Examination. When renewing a broker's license, a broker
shall submit, along with the renewal application:
(a) a summary of data on the broker's trust
account(s) on a form prepared by or approved by the Commission or
(b) a report on the broker's designated trust
account(s) from a Certified Public Accountant. The report of the Certified
Public Accountant must take the form provided for in paragraph (10) of this
Rule.
(8)
Abandoned
Funds in a Trust Account. Whenever a real estate licensee believes that
a person who placed trust funds in the licensee's care has abandoned those
funds, the licensee may not disburse those funds from a trust account unless:
(a) the licensee's written authorization to
hold those funds requires a particular disbursal;
(b) the licensee has complied with the
requirements of the Disposition of Unclaimed Property Act, O.C.G.A. Section
44-12-191, et
seq.; or
(c) the licensee
has complied with such other statutory or court ordered requirements as may be
appropriate to the circumstances.
See also O.C.G.A. §§ 3-40-2,
43-40-20,
43-40-21, &
43-40-25.
(9)
Trust Account Requirements for
Non-Broker Licensee Owned Property. O.C.G.A. Section
43-40-20(h)authorizes
a non-broker licensee to open a trust account for the deposit of trust funds
received on properties the non-broker licensee owns if the broker holding the
non-broker licensee's license approves the opening of such an account and if
the non-broker licensee provides the broker with regular reports accounting for
the funds in such an account. The Commission shall deem a property "owned by a
licensee" if the deed for such property reflects either (a) only the name of
the licensee or (b) only the name of a business entity of which the licensee is
the sole owner, member, or stockholder. Whenever a licensee (a) owns any
interest in a property that is less than one hundred percent and (b) receives
any trust funds on such property, such licensee must deposit those trust funds
into the trust account of a firm licensed under this
chapter.
O.C.G.A. §§
43-40-2,
43-40-25.
