Current through Bulletin 2023-24, December 15, 2023
(1) The principal broker of a property
management company shall:
(a)
(i) if regularly engaged in property
management on behalf of seven or more individual units, establish at least one
property management trust account that is separate from the principal broker's
real estate trust account and is maintained in a bank or credit union located
within the state of Utah; and
(ii)
if engaged in listing or selling real estate, or if regularly engaged in
property management on behalf of six or fewer individual units, maintain at
least one real estate trust account in a bank or credit union located within
the state of Utah and maintained pursuant to Section
R162-2f-403a;
(b) at the time a property
management 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 within ten business days 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 property management 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 transaction;
(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 property
management 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
property management 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;
(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 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 more than one party to a contract
makes 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 parties
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 more than one party claims 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 funds are
due to be disbursed, 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 the 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
accounts 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 property management trust account
shall be used for the purpose of securing:
(a)
tenant security deposits;
(b)
rents;
(c) money tendered by a
property owner as a reserve fund or for payment of unexpected expenses;
and
(d) if the principal broker has
not established a separate real estate trust account, client funds deposited
with the principal broker in connection with a real estate transaction
regulated under Title 61, Chapter 2f, Real Estate Licensing and Practices
Act.
(13) A principal
broker violates Subsection
61-2f-401(4)(b)
if:
(a) the principal broker deposits into a
property management trust account funds belonging to the principal broker
without:
(i) maintaining records to clearly
identify the total amount belonging to the principal broker; or
(ii) performing a monthly line-item
reconciliation of the deposits and withdrawals of funds belonging to the
principal broker; or
(b)
the principal broker:
(i) deposits more than
$10,000 of the principal broker's own funds into the property management trust
account; or
(ii) fails to transfer
earnings for property management services out of the property management trust
account and into the operating account within 60 days from the date the
earnings are earned according to contract and received.
(14) A principal broker may
disburse funds from a property management trust account only in accordance
with:
(a) specific language in the property
management contract or tenant lease agreement, as applicable, authorizing
disbursement;
(b) other proper
written authorization of the parties having an interest in the funds;
(c) this section; or
(d) court order.
(15) A principal broker who transfers funds
from a property management trust account for any purpose shall maintain records
to clearly evidence that:
(a) prior to making
the transfer, the principal broker verified the money as belonging to the
property owner for whose benefit, or on whose instruction, the funds are
transferred;
(b) any money
transferred into an operating account as a commission or for the principal
broker's property management fee is earned according to the terms of the
principal broker's contract with the property owner;
(c) any transfer for maintenance, repair, or
similar purpose is:
(i) authorized according
to the terms of the applicable property management contract, tenant lease
agreement, or other instruction of the property owner; and
(ii) used strictly for the purpose for which
the transfer is authorized, with any excess returned to the trust
account.
(16) A
principal broker may not pay a commission or transfer funds for the principal
broker's property management fee directly from the property management trust
account but shall first deposit the funds into the principal broker's operating
account prior to further disbursing the funds.
Amended by
Utah
State Bulletin Number 2020-21, effective
10/21/2020
Amended by
Utah
State Bulletin Number 2021-12, effective
6/8/2021
