UNIT 8: TRUST ACCOUNTS

What is a master escrow account log?

A log identifying all escrow bank account numbers and the name and address of the bank where the escrow accounts are located.

A sponsoring broker who is also serving as an escrow agent must notify all principals in writing if or when one of these situations occurs:

A principal fails to tender escrow moneys. A principal's payment as escrow moneys is dishonored by the financial institution on which it was drawn There appears on the face of the governing contract to be a deficiency in the amount on deposit

In what form can earnest money be taken

Any

is an ILLEGAL act in which a real estate licensee places client or customer funds with his or her own personal funds.

Commingling

In most cases, the system of recording earnest money must consist of at least the following escrow records

Master escrow account log Journal Ledger Monthly reconciliation statements

When a transaction has consummated or terminated, the sponsoring broker must disburse the funds

No earlier than the day the transaction is consummated or terminated and Not later than the next business day after the transaction is consummated or terminated, unless the broker has received other written direction from all principals to the transaction or their duly authorized agents

What should a broker do if escrow records are stolen, lost, or destroyed?

Report the loss to their state licensing agency and then obtain copies of monthly bank statements, deposit and disbursement receipts, and any other available records, so he or she can reconstruct the lost escrow records

Funds become "unclaimed" in either of these circumstances:

Six months have elapsed since the sponsoring broker has received a written demand from one of the principals or the principal's authorized agent

what does a journal show?

The chronological sequence in which funds are received and disbursed by the broker

The sponsoring broker must keep the documentation of the reconciliation for

a specified number of years (usually 3-5 years) from the last day of the month covered by that reconciliation.

The sponsoring broker must keep all escrow moneys on deposit in an escrow account until

a transaction is consummated or terminated

When a transaction has consummated or terminated, the sponsoring broker must disburse the funds

according to the terms of the contract

Each sponsoring broker must keep a master escrow account log identifying

all escrow bank account numbers and the name and address of the bank where the escrow accounts are located

Many states define escrow moneys as

all moneys, promissory notes or any other type or manner of legal tender or financial consideration deposited with any person for the benefit of the parties to the transaction

An __________________ disbursement is one which is made on behalf of, and at the written direction of, all principals to the transaction or their duly authorized agents

authorized

Under the terms of a written agreement between a licensee and a client, certain money does NOT fall under the heading of "escrow moneys."

be rent money paid to a licensee for transmittal to the licensee's client (the owner) in a property management agreement.

The sponsoring broker must keep a journal for

each escrow account

The sponsoring broker will keep a separate ledger or a separate section of each ledger (as he or she chooses) for

each of the various kinds of real estate transactions, such as leases and sales

ALL escrow accounts, whether interest-bearing or non-interest bearing, must be maintained at a

ederally-insured depository

Earnest money, also known as trust account money, is a deposit, usually made in the form of a check, to

show evidence of the buyer's intention to carry out the terms of the contract in good faith.

Only the _____________________ or authorized agent is permitted to withdraw funds from the escrow account

sponsoring broker

An escrow account must be non-interest bearing, unless

the parties to the transaction specifically require, in writing, that the deposit be placed in an interest-bearing account, OR if the deposit is required by law to accrue interest

Sometimes the earnest money check is from someone other than the party to the contract. In that instance, when earnest money is returned, it must be returned to

the party in the contract

If an interest-bearing account is required, the sponsoring broker must indicate in writing

who will be receiving the interest from the account