Current through Bulletin 2024-06, March 15, 2024
(1) The principal broker of a real estate
company shall:
(a)
(i) if engaged in listing or selling real
estate, maintain at least one real estate trust account in a bank or credit
union located within the state of Utah; and
(ii) if engaged in property management, refer
to trust account rules in Section
R162-2f-403b;
(b) at the time a real estate
trust account is established, or if the trust account is moved to another bank
or credit union or the trust account number is changed, notify the division in
writing of:
(i) the account number;
(ii) the address of the bank or credit union
where the account is located; and
(iii) the type of activity for which the
account is used.
(2) A real estate trust account maintained by
a principal broker shall be non-interest-bearing, unless:
(a) the parties to the transaction agree in
writing to deposit the funds in an interest-bearing account;
(b) the parties to the transaction designate
in writing the person to whom the interest will be paid upon completion or
failure of the sale;
(c) the person
designated under Subsection (2)(b):
(i)
qualifies at the time of payment as a non-profit organization under Section
501(c)(3) of the Internal Revenue Code; and
(ii) operates exclusively to provide grants
to affordable housing programs in Utah; and
(d) the affordable housing program that is
the recipient of the grant under Subsection (2)(c)(ii) qualifies at the time of
payment as a non-profit organization under Section 501(c)(3) of the Internal
Revenue Code.
(3) A
principal broker may not deposit into the principal broker's real estate trust
account funds received in connection with rental of tourist accommodations
where the rental period is less than 30 consecutive days.
(4) Records of deposits to a real estate
trust account shall include:
(a) transaction
number or unique client identifier, as applicable pursuant to Subsection
R162-2f-401c(1)(j);
(b) identification of payee and
payor;
(c) amount of
deposit;
(d) location of property
subject to the transaction; and
(e)
date and place of deposit.
(5) Except for electronic transfers provided
for in Subsection (6), any instrument by which funds are disbursed from a real
estate or property management trust account shall include:
(a) the business name of the registered
entity;
(b) the address of the
registered entity;
(c) clear
identification of the trust account from which the disbursement is made,
including:
(i) account name; and
(ii) account number;
(iii) transaction number or unique client
identification, as applicable, pursuant to Subsection
R162-2f-401c(1)(k);
(iv) date of disbursement;
(v) clear identification of payee and
payor;
(vi) amount
disbursed;
(vii) notation
identifying the purpose for disbursement; and
(viii) check number, wire transfer number, or
equivalent bank or credit union instrument
identification.
(6) Any instrument by which funds are
disbursed from a real estate or property management trust account shall include
those items required in Subsection (5), except when a required item is not able
to be included due to the inherent limitations of such instrument. In a
circumstance in which any item required by Subsection (5) is not included in
the instrument, the principal broker shall still comply with the reconciliation
requirements of this section and Section
R162-2f-401k.
(7) Any instrument of conveyance that is
voided shall be clearly marked with the term "void" and the original instrument
retained pursuant to Section
R162-2f-401k.
(8) If both parties to a contract make a
written claim to money held in a principal broker's trust fund and the
principal broker cannot determine from any signed agreement which party's claim
is valid, the principal broker may:
(a)
interplead the funds into court and thereafter disburse:
(i) upon written authorization of the party
who will not receive the funds; or
(ii) pursuant to the order of a court of
competent jurisdiction; or
(b) within 15 days of receiving written
notice that both parties claim the funds, refer the parties to mediation if:
(i) no party has filed a civil suit arising
out of the transaction; and
(ii)
the parties have contractually agreed to submit disputes arising out of their
contract to mediation.
(9) If a principal broker is unable to
disburse trust funds within three years after the failure of a transaction, the
principal broker shall remit the funds to the State Treasurer's Office as
unclaimed property pursuant to Title 67, Chapter 4a, Revised Uniform Unclaimed
Property Act.
(10) Trust account
reconciliation requirements are as follows: For each real estate or property
management trust account operated by a registered entity, the principal broker
of the entity shall:
(a) maintain a
date-sequential record of each deposit to and disbursement from the account,
including a cross-reference to the information specified in Subsection
R162-2f-401c(1)(j);
(b) maintain a current, running total of the
balance contained in the trust account;
(c)
(i)
maintain records sufficient to detail the final disposition of any funds
associated with each transaction; and
(ii) ensure that each closed transaction
balances to zero;
(d)
reconcile the brokerage trust account records with the bank or credit union
records at least monthly;
(e)
reconcile the brokerage trust account records with the brokerage client account
records at least monthly; and
(f)
upon request, make the trust account records available to the division for
auditing or investigation.
(11) The principal broker shall notify the
division within 30 days if:
(a) the principal
broker receives, from a bank or credit union in which the principal broker
maintains a real estate or property management trust account, documentation to
evidence that the trust account is out of balance; and
(b) the imbalance cannot be cured within the
30-day notification period.
(12) A real estate trust account shall be
used for the purpose of securing client funds:
(a) deposited with the principal broker in
connection with a real estate transaction regulated under Title 61, Chapter 2f,
Real Estate Licensing and Practices Act;
(b) deposited under a Real Estate Purchase
Contract, construction contract, or other agreement that provides for the
construction of a dwelling, if the principal broker is also a builder or
developer; or
(c) collected in the
performance of property management duties, pursuant to Subsection
(13).
(13) A principal
broker violates Subsection
61-2f-401(4)(b)
if:
(a) the principal broker:
(i) deposits more than $1000 of the principal
broker's own funds into a real estate trust account; or
(ii) fails to transfer funds due to the
principal broker or an affiliated licensee into the operating account within 60
days from the closing or termination of the real estate transaction;
or
(iii) fails to transfer earnings
for property management services out of the property management trust account
and into an operating account within 60 days of the date the earnings are
earned according to contract and received.
(14) A principal broker of a real estate
sales company who regularly engages in property management on behalf of seven
or more individual units shall establish at least one property management trust
account that is:
(a) separate from the real
estate trust account; and
(b)
operated in accordance with Section
R162-2f-403b.
(15) A principal broker may not pay a
commission from a real estate trust account, without first:
(a) obtaining written authorization from the
buyer and seller, or other parties having an interest in the funds, through
contract or otherwise;
(b) closing
or otherwise terminating the transaction;
(c) delivering the settlement statement to
the buyer and seller;
(d) ensuring
that the buyer or seller whom the principal broker represents has been paid the
amount due as determined by the settlement statement;
(e) making a record of each disbursement;
and
(f) depositing the funds into
the principal broker's operating account prior to further disbursing the
funds.
(16) A principal
broker may disburse funds from a real estate trust account only in accordance
with:
(a) specific language in the Real Estate
Purchase Contract authorizing disbursement;
(b) other proper written authorization of the
parties having an interest in the funds;
(c) this section; or
(d) court order.
(17) A principal broker may not release for
construction purposes those funds held as deposit money under an agreement that
provides for the construction of a dwelling unless the purchaser authorizes
such disbursement in writing.
(18)
A principal broker may not release earnest money or other trust funds
associated with a failed transaction unless:
(a) a condition in the Real Estate Purchase
Contract authorizing disbursement has occurred; or
(b) the parties execute a separate signed
agreement containing instructions and authorization for disbursement.
(19) With the client's written
consent, a principal broker may reallocate earnest money funds from a failed
transaction held in a trust account as earnest money for the same client in
another transaction.
