Chapter 1: Unit 5 Trust Funds and Records

A broker who claims that any part of the earnest money (or money paid in connection with the real estate transaction) is part or all of the broker's commission or fee is considered in compliance with the Commission's trust account laws IF:

- A sales transaction has closed - A transaction has been delivered - A lease/ purchase transaction has closed - The broker has secured a written agreement

A trust account must be maintained by each broker who accepts any of the following in a real estate brokerage transaction ...

- Down payments -Earnest money deposits - Security deposits - Rents - Association fees - Other trust funds

Requesting the holding of the check (until an offer is accepted) can occur only when the following is true ...

- It must be clearly stated in the contract - the salesperson must still turn the check over to the broker - Only the broker is allowed to hold the check

Each broker who is required to maintain a trust or escrow account must also maintain an accounting system in which each trust or escrow deposit is detailed with the following information.

- Names of buyer and seller or the parties invoked in a transaction. - Amount and date of deposit - Identification of property involved - The amount, payee, and date of each check drawn in the escrow account in connection with that deposit.

The Commission will have reason to conclude that the broker's trust account is in an "unsafe or unsound condition" if the broker has

- Not complied with the trust account regulations - Refused to submit their books, papers and other documents for inspection of any examiner

Any copies of documents and other records may be maintained in any records storage system that utilizes paper, film, electronic, or other media provided that ...

- The licensee can produce true and correct copies of such documents and records. - Copies of such documents and records can be made available to an authorized representatives of the commission upon reasonable request and reasonable cost to the Commission.

Examination of account s, during the renewal period, may be done be ...

- a CPA that is hired by the Commission - Real estate commissioner so dependent accountant

Regardless of the type of system a firm chooses it must ...

- include all the components required by law and sound business practices - be readily accessible - be readily understandable format - be reasonably available to any authorized representative of the commission

If a Georgia licensee wishes to sell or lease his property, he must do ONE of the following:

1. List the property with the broker 2. List the property with a different broker 3. Handle the transaction himself

It is typical that a buyer requests that the earnest money check be held until the offer is ________________________.

Accepted

Improper disbursal of funds is seen as ...

An Incompetence

Whenever a licensee offers to purchase a property in order to enable a party to purchase, sell, lease, or exchange anothr property, he or she must write a contract expressing all the terms and conditions of the purchase prior to or at the same time of the other party's _______________ entering into a contract for the new property.

Another

When licensees deposit funds into a designated trust account, this account must be maintained by the __________________ with whom their license is affiliated or an account that is approved by them.

Brojer

_________________________ is the mixing of the client's monies with the broker's or firm's funds.

Commingling

If a broker approves an affiliated licensee's holding trust funds in a designated trust account owned by the licensee, then the broker must notify the bank in which the account is maintained to designate the account as a trust account. In addition, the broker must notify the _______________________ of the name of the bank in which the account is maintained, the number of the account, and the name of the licensees who own the account.

Commission

If a nonresident broker is allowed to use a bank in their state, the ______________________ is authorized to examine e the account at anytime.

Commission

A licensee must place all cash, checks or other items of value he or she deceives when acting as a principal in the sell of their own property, and all security deposits received in rental property he or she owns into the custody of the __________________________ ________________.

Employing Broker

If a situation arises in which the customer of a salesperson asks for a refund of the earnest money, the salesperson must immediately refer this customer or client to their _____________ ____________________.

Employing broker

True or False: brokers can only take a limit of $500 from trust or escrow accounts without facing any sort of disciplinary action.

False: it is illegal for a broker to use any funds from an escrow it trust account.

True or False: even if a broker does not accept or receive any sort of trust funds, he must still open up a separate designated trust.

False: no funds no designated account

True or False: funds that are placed in a trust or escrow account can be utIlized to pay for the broker or his firms debts.

False: the fnds are protected ince they enter a trust or escrow account .

True or False: brokers who manage real property or community associations may maintain designated rentals assessment trust or escrow accounts in the same accounts as their other escrow or trust accounts.

False: they must be kept separate

True or False: a licensee does not have to disclose that they are real estate agents or brokers when they are seeking to sell, rent, lease or purchase property.

False: whether active or inactive, licensees must disclose their licensed status.

The broker holding items for a licensee into a ___________________ insured bank and make appropriate arrangements for the safekeeping of any items of value received other than cash or checks.

Federally

If a lice see who owns a designated trust account files a bankruptcy petition, he or she must ____________________ notify the Commission in writing of the filing if that petition.

Immediately

A court brought about a trust account violations the power and jurisdiction to ___________ and appoint a receiver for the property and business of the defendant.

Impound

Earnest money is permitted under Georgia law to be deposited in an _______________ ________________________ account if the contract provides for this AND the contract names the person who is to receive the interest earned on this deposit.

Interest Bearing

Licensees are permitted to utilize either _____________________ or ___________________ accounting systems to meet the accounting requirements of the Commission's rules.

Manual or Electronic

Under Georgia Law, a broker who is required to maintain a trust or escrow account must produce at least _______________ a month, a written reconciliation statement comparing the bringers totals liability with the reconciled bank balance of the broker's trust account.

Once

Brokers must provide the Commission with the name and number of the account within ________ month(s) of opening each account.

One (1)

Once a broker receives trust funds, he has ____________ business day to open a designated trust or escrow account.

One (1)

The Commission consider a broker who disburses trust funds from designated trust account under the following circumstances as having __________________________ __________________ his duty.

Properly fulfilled

Information for the written reconciliation statement must be proved to the licensee's broker at least on a ________________ basis.

Quarterly

In case of irreconcilable differences, the ______________ ________________________ statement must contain a description or explanation for the difference and any corrective actions taken with reference to shortages or overages of funds in the accounts.

Reconciliation Statement

During each __________________ period, of a broker's license, the Commission has authority to examine any designated trust or escrow account.

Renewal

A trust account must be maintained in a _______________________ ( separate/ joint) federally insured bank checking account in Georgia.

Separate

If security deposits are kept in a designated rental trust or escrow account, they must be clearly identified as such and credited to the __________________.

Tenant

In the event that a licensee believes certain funds were abandoned, the licensee may not disburse those funds unless ... - The licensee's written authorization requires a particular disbursal - The licensee has complied with the requirements of the Disposition of Unclaimed Property Act. - The licensee has complied with all other statutory or court orders requirements related to the circumstances

The commission can allow a nonresident broker who accepts any trust funds in a real estate brokerage transaction to maintain the trust account required by Georgia law in a _____________ of the nonresident broker's state of residence.

The brokers trust liability is the _______ ____________ of all deposits received, required by contract to deposit and being held by the broker at any point in time.

The minimum information to be included in the monthly reconciliation statement for each account includes: - Date of reconciliation - Date used to reconcile balance - Name of bank - Name on the account - Accounts number - Account balance and date - Deposits in transit - Amounts of any outstanding checks - Itemization of brokers outstanding trust liability - Other items necessary to reconcile the bank account balance.

A broker may also elect to have his own CPA to provide the account reports in lieu of the Commissions representative conducting this investigation. So Lang as they use ...

The specific form provided for in the laws

Copies of engagements, closing statements, leasers and other documents related to a real estate transaction must be kept in the broker's file for a minimum of ________________ years and made available to authorized agents of the Commission.

Three (3)

True or False: Georgia code allows brokers to maintain more than one designated trust or escrow account.

True

True or False: escrow accounts, bank documents, bank statements, receipts and other documents must be made available to authorized agents of the Commission upon reasonable request and at a reasonable cost to the Commission.

True

Because an active licensee's broker is considered accountable for all the licensee's transactions, including personal ones, the broker must be informed in __________ and must ______________ the procedure and any advertising.

Writing, Approve

If The brokers elect to deposit any funds into an interest bearing account, then prior to making the deposit, the broker must obtain a ____________________ _______________________ of the parties indicating to whom the broker will pay interest earned on those funds.

Written Agreement

It is the broker's responsibility to have _______________ _____________________ regarding such monetary transactions. It is also the broker's duty to entrain all affiliated licensees the policies regarding the handling of funds.

Written Policies